By Jon Peterson
Miami-based Market Street Real Estate Partners has earned a four percent cap rate on its $29.45 million acquisition of the 58,000 square foot 755 Sansome Street office building acquisition in San Francisco, according to sources familiar with the transaction. This return is based on the current rents in the property.
Allan Serviansky, principal with Market Street Partners, declined to give out any financial, occupancy or tenant information of the property when contacted for comment for this story.
The sellers of the property were two individuals. They sold the asset through the San Francisco office of Colliers International.
“The sellers just felt that the timing was right. They had owned the asset since 2008 and felt now was a good time to sell given the current market conditions in San Francisco. They had bought the property seven years ago and paid somewhere in the range of $18 million to $19 million,” says Tim Maas, an executive vice president with Colliers International. He was the lead broker on the sale.
There is a definite re-leasing opportunity with this property. “There are some tenants in the property that are as much as 30 percent to 40 percent below market. The biggest tenant in the property is Fitness Anywhere. It has a lease that covers 10,000 square feet and another 10,000 square feet that it is subleasing. This lease expires at the end of 2017. The new owners will certainly have a chance to add some value to the property in the future,” said Maas.
The property is now 93 percent occupied, and the office complex did garner a significant amount of interest. “We received a total of 11 offers for the property. This included a mixture of domestic and foreign buyers. One of them was a capital source from Southeast Asia,” said Maas.
755 Sansome is located in the Jackson Square sub-market in San Francisco. This is a region of the city that had a significant drop in vacancy from the third to four quarter of last year. According to data from Colliers International, vacancy fell from 7.4 percent to 5.1 percent during the time period. This submarket has 41 office buildings totaling 2.4 million square feet.
Market Street Partners is a privately held real estate investment and management company. According to its Web site it owns several other properties in San Francisco. This includes 604 Mission, 580, 989 and 944 Market and 140 and 143 Second Street.