DivcoWest and CalSTRS Buy 49% Interest in 199 Fremont in San Francisco for $186.2MM

By Jon Peterson

DivcoWest Properties and the California State Teachers Retirement System (CalSTRS) have purchased a 49 percent interest in the office building in San Francisco located at 199 Fremont. The sales price of $186.2 million brings the valuation of the investment to $380 million, or $948 per square foot, according to a San Francisco 4th quarter industry report published by Newmark Knight Frank.

A company representative of DivcoWest declined to comment when contacted for this story. The remaining 51 percent interest in the property is owned by GLL Real Estate Partners. They entity also would not comment on the partial property sale.

Following the acquisition, the owners placed a $128 million loan on the asset, which was secured by Wells Fargo, according to public documents.

GLL has been the 100 percent owner of 199 Fremont since 2012. It had acquired the property for $234.5 million at that time. The property is an office building that totals 401,043 square feet, and it leases some of its office space to Stubhub and Fitbit.

DivcoWest has a history of buying assets that are near major transportation hubs, and 199 Fremont is a good example of this type of property. It is situated near the Transbay Terminal in an area of San Francisco that has become one of most prominent submarkets in the city. This allows employees in the building many transportation options for getting across the entire region.

GLL is an international real estate investment firm based in Munich, Germany. According to its website, the firm manages a US portfolio valued at 3 billion euros in a combination of office, retail and industrial investments.

The overall San Francisco office market had a current vacancy of 3.2 percent at the end of 2019, according to data from Newmark Knight Frank. Asking rents for the Class A space for the year increased by 7.7 percent to $92 per square foot.

West Coast Commercial Real Estate News