By Jon Peterson
New York City-based MetLife Investment Management will be putting up for sale a 49 percent interest in the 764,000 square foot Park Tower office building in San Francisco this fall, according to several sources that follow the office building sales market in San Francisco. The price point on the sale could be at around $1,500 per square foot, which could reach a sale price of $562.5 million for 49-percent interest in the asset.
MetLife declined to comment when contacted for this story. The real estate firm has hired Eastdil Secured to be the listing agent on the sale, according to sources.
Should the price per square foot be reached, it would set another record for major office building sales in San Francisco. Kilroy Realty has stated that it plans to close on the acquisition of 345 Brannan at the end of 2018 at $146 million, or $1,327 per square foot, which would be the new price point high on a per square foot basis.
There are several factors as to why there is a potential high price point for Park Tower, as stated by real estate brokers active in San Francisco. The property is a brand-new asset. It’s 100 percent leased to Facebook for the next 15 years. Finally, there are many capital sources that are looking to buy major office building assets in San Francisco.
There will be a variety of capital sources that might be interested in Park Tower. One possibility could be foreign sovereign wealth funds that are interested typically in investing in properties where less than a 50 percent interest in an asset is up for sale.
The potential cap rate on the sale would come in somewhere in the range of 4 to 4.5 percent. This yield would be based on the property’s current net operating income.
MetLife has held an ownership stake in Park Tower since October 2015. At that time the real estate investor had made a $345 equity investment into the property. The source of this capital was the general account of MetLife.
This investment gave MetLife a 95 percent ownership position in the property. The other 5 percent was held by John Buck Company and Golub & Company, both based in Chicago.