New York State Teachers to Consider 49% or 100% Interest Sale of 1.1MM SQFT 525 Market in San Francisco

By Jon Peterson

New York State Teachers Retirement System (NYSTRS) is willing to take offers for a 100 percent sale of the 1.1 million square foot, 38-story office building in San Francisco located at 525 Market Street, according to a statement from the pension fund.

“NYSTRS is seeking bids for a 49 percent partial interest but will also consider a sale of a full interest in the asset. The potential sales price on the property will be determined by the market,” as stated by the pension fund in an email.

The pension fund is bringing the San Francisco office property up for sale as a way to trim its real estate portfolio and exposure in the Pacific region. “NYSTRS is looking to reduce its overweight to the Pacific region, and that is why it’s bringing the property in San Francisco up for sale,” according to an email from the pension fund. This fund considers the Pacific region to cover California, Oregon and Washington.

Presently, the pension fund holds equity real estate assets in the Pacific region that makes up 33.7 percent of its $9.8 billion of direct real estate assets, as stated by the investor in a board meeting document. The investor’s real estate strategic plan calls for the Pacific region to make up approximately 25 percent of its total portfolio. The Pacific region is also the biggest part of the fund’s overall portfolio. The next closest regions are in the Northeast with 19.1 percent, in the Mideast with 12.7 percent and in the Southeast with 12 percent.

The pension fund is also over-allocated to office buildings with its existing real estate portfolio. Currently office buildings amount to 33.8 percent of the overall portfolio, as compared to the target for the real estate strategic plan of around 30 percent.

NYSTRS has held the ownership of 525 Market since 1998. The listing agent on the sale is with the San Francisco office of Eastdil Secured. The property totals just over one million square feet, and the current occupancy of the property is 97 percent. Major tenants in the property include Amazon, Wells Fargo and Sephora.

The pension fund owns the property as a separate account investment as part of a relationship with J.P. Morgan Asset Management. The on-site property manager is Cushman & Wakefield.

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