By Jon Peterson
New York City-based DWS, formerly known as RREEF, will be the buyer of a 49 percent interest in 525 Market Street in San Francisco. The purchase price is approximately $1,200 per square foot, or around $608 million, according to multiple sources aware of the sale.
DWS did not respond to an email for this story.
The seller of the interest is the New York State Teachers Retirement System. This entity also declined to comment when contacted for this story. The pension fund will hold onto the remaining 51 percent interest of the property. The listing agent on the sale was the San Francisco office of Eastdil Secured.
NYSTRS had decided to put 525 Market up for sale in August of this year. At that time, it was willing to accept offers for either a 49 percent interest or to fully sell the property, according to an email received from the pension fund at that time.
The pension fund had owned 525 Market since 1998, when it made the investment for a separate account through its relationship with J.P. Morgan Asset Management. The property has a total square footage of just over one million square feet, and when the asset was put up for sale, the office building was 97 percent occupied. Some of the tenants included Amazon, Wells Fargo and Sephora.
The partial sale of the property is an example of NYSTRS looking to lower its exposure to real estate in the Pacific region and with office building products in general. The pension fund had 33.7 percent of its real estate in the Pacific region, which includes California, Oregon and Washington, at the time when the asset was placed on the market for sale. The fund’s strategic plan for real estate exposure in this region is at 25 percent.
NYSTRS had an office allocation at the end of August 2019 that made up 33.8 percent of the pension fund’s real estate portfolio. The pension fund’s real estate investment plan called for office to be 30 percent of the portfolio.