DivcoWest and CalSTRS Venture Pays $293MM for 301 Howard in San Francisco

CalSTRS, Eastdil Secured, Vanbarton Group, 301 Howard, California State Teachers Retirement System, DivcoWest, San Francisco
Image courtesy of Embarcadero Capital Partners

By Jon Peterson

San Francisco-based DivcoWest and the California State Teachers Retirement System joint venture has paid $293 million, or $918 per square foot, to buy the 319,000 square foot office building in San Francisco located at 301 Howard Street, according to sources with direct knowledge of the transaction. The cap rate on the deal was 5.1 percent, according to a report by Kidder Mathews.

DivcoWest did not want to comment when contacted for this story.

The seller of the property was The Vanbarton Group. The New York real estate investment firm had hired the San Francisco office of Eastdil Secured to be the listing agent on the sale. Eastdil also declined to comment when contacted for this story.

Vanbarton had owned the property since January of 2015, when the company paid $200 million, or just around $627 per square foot, to acquire the building. Since the acquisition, the owners were able to bring the property to be nearly fully leased. Today, the asset is at 99 percent leased.

301 Howard Street is located in the heart of San Francisco’s South Financial District. It was developed in 1987 and has 23 stories with roughly 14,000 square-foot floor plates. Located at the corner of Howard and Beale Streets, the building offers easy access to all forms of transportation including commuter bus service in the new Transbay Transit Center, BART, Muni, ferries, the Bay Bridge and all major freeways.

The investment by DivcoWest and CalSTRS will be the first asset to be placed into a new joint venture the two firms formed in May of 2018. The two entities have a total of $300 million of equity placed into the venture.

The investment strategy is to buy core and core plus assets in select markets across the country. The targeted markets include San Francisco, Los Angeles, San Diego, Seattle, Boston, New York City and Austin.

The assets for the venture will be located in markets that have strong local economies, highly qualified workforce and a tenant base in dynamic new economy industries.

West Coast Commercial Real Estate News