General Growth Buys Into San Francisco Retail

San Francisco Apple Store The Registry real estate

By Jon Peterson

Chicago-based General Growth Properties has expanded its presence in the San Francisco retail market with its $81.5 million acquisition of partial interest in Deka Immobilien Investment GmbH’s portfolio, according to a public filing with the Securities and Exchange Commission for its third quarter 2013 supplemental report.

The publicly traded REIT put in $40.3 million or 49.4 percent of equity, and there was $41.3 million of debt on the transaction. General Growth now holds a 50 percent stake of the portfolio.

“At this time we are not releasing any additional information other than what was in our quarterly Supplemental and 3rd quarter 2013 earnings release,” wrote David Keating, vice president of corporate communications for General Growth in an e-mail.

The rest of the portfolio is held by New York City-based Ashkenazy Acquisition Corp. This company had paid $160 million for the two properties in September of this year, according to sources familiar with the transaction. Ashkenazy did not return several phone calls for comment for this story.

The cap rate on this deal was 3.8 percent. This yield is based on the current net operating income being produced by the property.

One of the properties in the portfolio is 1 Stockton Street. This is where Apple has a flagship store that totals 16, 987 square feet. Industry observers see this property as having no risk. Apple is a very strong tenant and has a lease that runs for another five years.

The other property in the deal was the 42,000 square foot One Union Square property. Bulgari, a high-end jewelry store, is one of the tenants in this property.

Both of the properties are located in the high demand retail sub-market of Union Square. There is a tremendous amount of demand from both investors and tenants to be in the sub-market and there is very little if any space to add more square footage to the market.

General Growth owns one other property in San Francisco. This is the 861,000 square foot Stonestown Galleria regional mall located at 3251 20th Avenue. The property is anchored by Nordstrom and Macy’s.

West Coast Commercial Real Estate News