Rockefeller Earns Nearly 30 Percent Profit on Sale of 50 Beale in San Francisco

The Rockefeller Group Investment Management Corp., Real Capital Analytics, San Francisco, Commercial Real Estate News, The Paramount Group

50_Beale_St_San Francisco real estate The RegistryBy Jon Peterson

New York City-based The Rockefeller Group Investment Management Corp. has achieved a strong profit on the sale of the 662,060 square foot 50 Beale Street office building in San Francisco.

The sales price, which was reported by the company this week, was pegged the sale at $395 million or $596 per square foot. Rockefeller had acquired the property about two years earlier for $305 million or $477 per square foot, according to a research report compiled by Real Capital Analytics, earning the New York investment company nearly 30 percent margin.

[contextly_sidebar id=”2UeztezaF3pmStPKWy7wLMxuswYes666″]50 Beale was acquired by New York City-based The Paramount Group. This buyer did not respond to phones for this story.

Rockefeller’s plans were to hold on to the property for a much longer period when it initially purchased it in September 2012. “When we first acquired the property we were really thinking about a holding period that might last as long as five to seven years,” says John Rivard, senior vice president and manager director of acquisitions and investments for Rockefeller.

Two reasons drove the earlier sale. “One was that were we able to negotiate a new lease on the property with Bechtel Corporation. This tenant had an existing lease in the property that was going to expire at the end of 2014. We signed them to a new lease that runs for seven years. Another factor was that the marketplace in San Francisco improved more dramatically than anyone could have predicted,” said Rivard.

Rockefeller had owned the property in a joint venture with Mitsubishi Estate New York. The sellers were represented in the transaction by the San Francisco office of Eastdil Secured. The asset was sold as an off-market transaction.

50 Beale was constructed in 1968. The property is now around 90 percent occupied, with the two main tenants being Bechtel and Blue Shield of California. The property does have some existing tenants with rents that are significantly below market. Rivard declined to state the actual percentage. This situation should give Paramount the chance to add some value to the asset in the future.

Rockefeller had owned 50 Beale for its commingled fund, the Rockefeller Group U.S. Premiere Office Fund. This investment fund was capitalized with $250 million of equity from institutional investors and $250 million from Mitsubishi Estate. The commingled fund only invested in office buildings. There was 50 percent leverage placed on the commingled fund.

All of the capital for this fund has now been invested. 50 Beale was the only asset in California that was acquired for the fund. The other properties in the fund are located in Boston and Washington, D.C.

Rockefeller would like to find more office buildings to buy in San Francisco. “This is a market that we obviously had success with in the past, and we would like to find more assets to buy in the future, “ said Rivard.

West Coast Commercial Real Estate News