PG&E Has Requested CPUC Permission to Return Net Gain Realized on the Sale to Customers
Relocation to Oakland is Expected to Result in Substantial Long-Term Cost Savings
PG&E Corporation and Pacific Gas and Electric Company (together, “PG&E” or the “company”) today announced an agreement to sell the company’s San Francisco headquarters complex, which includes 77 Beale Street and 245 Market Street, to Hines Atlas US LP, a Delaware limited partnership, for $800 million. In keeping with commitments PG&E made last year, the company is seeking California Public Utilities Commission (“CPUC”) approval to return the net gain realized on the sale to PG&E customers.
CBRE’s San Francisco Capital Markets team served as PG&E’s exclusive listing broker. The team working on the transaction included Kyle Kovac, executive vice president, Mike Taquino, executive vice president, and Giancarlo Sangiacamo, vice president.
PG&E remains on track for a phased move into its new headquarters at 300 Lakeside Drive in Oakland, beginning in the first half of 2022. The move is part of PG&E’s broader commitment to implement changes for the long-term benefit of its customers and communities. PG&E expects the move to Oakland to result in substantially lower headquarters costs over a long-term period.
“We are working hard every day to make fundamental changes at PG&E and become the utility our customers expect and deserve,” said PG&E Corporation Chief Executive Officer Patti Poppe. “We’ve made a commitment to keep customer costs as low as possible, and one way we’re following through on that is by selling non-core assets including real estate. This sale and relocation will achieve cost savings that directly help reduce customer bills. At the same time, it will give us an efficient and effective Bay Area workspace as we focus on delivering for all of the communities we serve.”
Under the terms of the sale agreement, the transaction closing is contingent on CPUC approval of the sale. PG&E will be proposing to the CPUC to distribute approximately $390 million to $420 million to customers resulting from the gain on sale over a five-year period to offset future customer rates. This offset would help moderate rate growth as the company continues to make significant safety and operational investments.
The new Oakland headquarters uses space more efficiently for PG&E’s workforce and provides greater flexibility in its layout and density. Its design can both promote workplace health and safety and accommodate potential new working arrangements in a post-COVID-19 environment. In addition, commutes for most PG&E headquarters-based coworkers should be shorter and less impactful, with a majority living in the East Bay and with multiple transportation options serving the Lakeside Drive location.
“We’re so excited to deepen our ties to the wonderful Oakland community. As an economic and innovation hub for California, Oakland is the perfect place for PG&E to call our hometown,” continued Ms. Poppe.
PG&E also plans to consolidate two other East Bay satellite office locations—3401 Crow Canyon Road in San Ramon and 1850 Gateway Boulevard in Concord—into the new Oakland headquarters. This overall plan simplifies PG&E’s Bay Area real estate footprint and further lowers its real estate costs for the benefit of customers.
This sale is consistent with PG&E’s focus on financial health and customer affordability and is not anticipated to have an impact on its 2021 equity needs. In addition, PG&E announced another strategic sale of non-core assets earlier this year: the $973 million sale of transmission tower wireless licenses to SBA Communications Corporation.
About PG&E Corporation
PG&E Corporation (NYSE: PCG) is a holding company headquartered in San Francisco. It is the parent company of Pacific Gas and Electric Company, an energy company that serves 16 million Californians across a 70,000-square-mile service area in Northern and Central California. For more information, visit http://www.pgecorp.com. In this press release, they are together referred to as “PG&E.”