REDCO Development to buy One Montgomery in San Francisco for Approximately $82MM

By Jon Peterson

Palo Alto-based REDCO Development will be the buyer of One Montgomery in San Francisco for roughly $82 million, or around $823 per square foot (the building in its previous purchase was measured at 75,880 square feet, and according to BOMA 2017 standards, the new ownership stated, it is now measured at 100,000 square feet), according to sources that are familiar with the transaction. The deal is planned to have a closing sometime before the end of June.

The seller of the property is New York City-based 601W Companies, and it had worked with CBRE in San Francisco as its listing agent on the sale. The people involved in the transaction are Michael Taquino, Kyle Kovac, Russell Ingrum and Giancarlo Sangiacomo. CBRE declined to comment when contacted for this story.

601W had been the owner of the property since 2011. It had paid $48 million for the 75,880 square foot asset, according to published reports. One Montgomery is the only property that the seller owns in the San Francisco Bay Area. Most of its real estate is located in New York City and Chicago.
Should REDCO Development become the new owner, it will have a major value-add asset in its portfolio. The office building now is 100 percent leased to Wells Fargo Bank, and the lease with this tenant is roughly 30 percent below market. The current lease will expire in December of 2019.

REDCO is purchasing the property with two partners, AEW’s Opportunity Fund and Bain Capital Real Estate. The purchase was part of a programmatic $250 million joint venture REDCO has with Bain Capital to acquire assets in the Bay Area and Seattle markets, and this was one of the first purchases the venture had made with those funds.

There is strong demand from office tenants looking for space in the range of 50,000 to 75,000 square feet. Currently within San Francisco, there are 13 tenants in the market seeking space above 50,000 to 75,000 square feet, according to sources that track the leasing market in San Francisco.
Another possibility for the future of One Montgomery is for a new development project. The site could be a fit for a high-end residential condo project, a new luxury hotel or a mixed-use development that has both of these property types in it.

REDCO is a company that was formed in 2019. Chris Freise is the managing partner and co-founder of the firm. He previously was a managing partner with Lift Partners.

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