Ground Lease on San Francisco’s Ferry Building to Trade for Around $290MM

San Francisco, Blackstone Group, Equity Office, Ferry Building, Allianz Real Estate, Hudson Pacific Properties

By Jon Peterson

Los Angeles-based Hudson Pacific Properties and New York City-based Allianz Real Estate will be the buyers of the ground lease for the Ferry Building in San Francisco, as stated by multiple sources with direct knowledge of the transaction. The purchase price is projected to be near $290 million, or around $1,100 per square foot.

The deal has not closed yet, but it should be completed in the next few days. Hudson Pacific declined to comment for this story, and Allianz did not respond to emails asking for feedback about the transaction.

Hudson Pacific and Allianz have formed a joint venture on the property. While some general feedback was provided about the percentage that each firm will own, the final breakdown was not confirmed.

The seller of the ground lease is New York City-based Blackstone. This company also declined to comment when contacted for this story. The sole listing agent on the sale was the San Francisco office of Eastdil Secured, which did not respond to several phone calls and emails for this story, either.

The cap rate on the transaction is projected to be in the area of 4 percent, as stated by sources who are aware of the ground lease being sold. This return is based on the property’s current net operating income.

Blackstone held the ground lease on the property since 2006. Blackstone uses Equity Office as its operating platform for its office assets that it controls around the country. The Ferry Building is viewed by many capital sources as an iconic and trophy asset in San Francisco. The ground lease on the property has another 65 years left to run.

The land on the property is owned by the Port of San Francisco. The property has a total of 270,000 square feet, and it has a mixture of 190,000 square feet of office space and 80,000 square feet of retail. When the property was put up for sale earlier this year, it had a current occupancy in the mid 90 percent range.