Cornerstone to Buy Another Office Building in San Francisco

Cornerstone Real Estate, San Francisco, USAA Real Estate, Ares Management, Blackstone, EOP, Bay Area news, 201 California, San Francisco real estate

By Jon Peterson

Cornerstone Real Estate Advisers will be adding a second office building in San Francisco in the last two months to its trophy case. The Hartford, Conn.-based real estate advisor will be the buyer of the 242,145 square foot 201 California office building in downtown San Francisco, according to several sources familiar with the transaction.

201 California San Francisco real estate The RegistryThe purchase price is projected to be in the range of $133 million or $549 per square foot. The deal has not closed but Cornerstone has been picked as the buyer, stated sources aware of the deal. This purchase price would come in at around 72 percent to 73 percent of replacement cost.

The eventual purchase of 201 California follows the $148.9 million acquisition in June of 33 New Montgomery by Cornerstone. This 240,134 square foot property was bought from Blackstone/EOP.

Representatives of Cornerstone declined to comment for this story. The seller of the property was a joint venture with San Antonio-based USAA Real Estate Company and New York City based Ares Management. Justin Hildebrandt, an executive director with USAA in its regional office in San Francisco, also declined comment when contacted. This regional office is located within 201 California.

The 17-story office building was originally developed in 1980 and was renovated in 2001. The property has a ground floor of 10,000 square feet of retail space.

Cornerstone’s capital source for both San Francisco office assets is its open-ended commingled fund, the Cornerstone Patriot Fund. This is a core commingled fund. Its investment structure allows for new investors to place capital into the fund at any time in the future. This is much different from a closed-end fund, which has a specific and limited time period where capital from investors will be accepted.

The Patriot Fund has total plan assets of $3 billion, according to sources familiar with the fund. This commingled fund has no entry queue. This is an important fact as it allows any new commitment to be placed into the commingled fund right away. There are many open-ended core funds that have significant entry queues that cause a new commitment not to be called by the manager from anywhere from several months to a year and a half.

The Patriot Fund looks to buy assets on a nationwide basis. This would be core office, industrial, retail and apartments.

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