By Jon Peterson
Boston-based Pembroke Real Estate has paid $631 per square foot or $182.1 million to buy the 288,619 square foot 100 California Street office building in downtown San Francisco, according to multiple sources that were aware of the transaction.
Pembroke declined to comment on the pricing of the property when contacted for this story due to a non-disclosure agreement with the seller. The asset was sold by a mixture of Belmont-based Embarcadero Capital Partners, Broadway Partners and PCCP. Embarcadero Capital did not respond to phone calls seeking comment.[contextly_sidebar id=”ZLkWOYRLjokDN12SPb2HAnMM7I4gqb2C”]Pembroke has been looking for an asset in San Francisco for some time. “We have been looking in San Francisco for our first deal for 18 months. We think that San Francisco is a market that on a long-term basis will continue to be a good place for us to own real estate,” says David Lucey, senior vice president and head of US operations for Pembroke.
The buyer considers this property a step below a core asset. “I would think that this property is somewhere between a core plus and value-add kind of property. What makes it this kind of a property is that is has some solid tenants with good income but there is a chance to add value by leasing up the empty space and bringing up the current rents to market levels,” said Lucey.
The property is now 83 percent occupied. A couple of existing tenants in the property are Samsung and Travelers Insurance Company. The current tenants have a normal roll period for the next several years. The rents in the property now are below market, but Lucey declined to say the actual percentage.
100 California Street was first built in 1960. It has been renovated twice in 2000 and again last year. The new ownership will be putting some additional capital into the property to improve the building systems and upgrade the lobby.
The property is located in the North Financial District sub-market of San Francisco. 100 California Street still has a ways to go before it reaches the occupancy level of its sub-market.
According to data from the San Francisco office of Colliers International, the vacancy for office buildings in the North Financial region for the second quarter was 7.9 percent. This area showed improvement from the first quarter where the vacancy was 8.8 percent. The sub-market has a total of 116 buildings amounting to 28.4 million square feet.
Pembroke would be interested in investing in additional office properties in the future. “We would like to either buy additional existing office assets or if we found a site that made sense to build a new office building. The only market that we are interested in doing this would be in downtown San Francisco,” said Lucey.
The company has a very short list of other markets in the United States that it considers for investment. These would be Boston and Washington, D.C. Pembroke facilitates the investment of private capital for FMR LLC, the parent company of Fidelity Investments.