By Jon Peterson
Dallas-based L&B Realty Advisors has paid around $739 per square foot or $44 million to acquire the 59,472 square foot 20 California Street office building in San Francisco, according to sources that are aware of the sale.
L&B Realty did not respond to phone calls seeking comment for this story.[contextly_sidebar id=”fKOhNQDoxgmE5PzxzvW6qZUgXAIGpASv”]The cap rate on this transaction was 4.95 percent, according to sources that track this kind of information in the marketplace. This return is based on the property’s current net operating income.
L&B Realty acquired the property in San Francisco for one of its separate account clients. This was the Public Employees Retirement Association of Colorado. This pension fund also did not respond to phone calls or e-mails seeking comment for this story.
20 California Street is a multi-tenant office building, and it is 100 percent leased. The property has floor plates that are in the neighborhood of 8,000 square feet. The property was first developed in 1908 but has gone through some extensive renovation over the past few years. Some of the current tenants in the building are Etsy, Vantiv and E.ON.
The property is in close proximity mass transit, which is one of its strongest features. Both BART and Muni are around a half block away so that employees to have significant public transportation options nearby.
L&B has been in the market looking for some time to find assets to acquire in San Francisco for either its separate accounts or its core open-ended commingled fund, L&B Core Income Partners.
20 California Street is considered to be in the North Financial District sub-market in San Francisco. According to data from the San Francisco office of Colliers International, this submarket is continuing to tighten up. Vacancy from the first to the second quarter of 2015 dropped from 7.8 percent to 7.4 percent.
Colorado PERA has 7.6 percent of its total plan assets invested in real estate through the first quarter of this year, according to its Web site. The real estate assets are valued at $3.35 billion and the total plan assets for the pension fund are $44.6 billion through the end of June. It invests in real estate through a combination of separate accounts and commingled funds. Office buildings make up 25.7 percent of its total real estate portfolio.
Correction: The previous version of this article stated that the per square foot price was $804.