By Jon Peterson
The Rockpoint Group has been chosen as the buyer of the 472,261 square foot 275 Battery Street office building in downtown San Francisco. The real estate fund manager is expected to acquire the property for around $650 per square foot or $307 million, according to sources aware of the transaction.
This transaction has not closed yet. The seller of the property is New York City-based TIAA-CREF. Both the buyer and seller declined to comment on the transaction when contacted by e-mail for this story.
275 Battery, which was constructed in 1989, is considered a core plus asset, according to sources in the brokerage community. This is mainly due to the age and current occupancy. Most investors consider core assets from an age perspective to be 10 years old or less and those that have occupancy in the low to mid 90 percent range.
The property is now 89 percent occupied, as stated by sources familiar with the property. The two biggest tenants in the building are law firms Squire Sanders, which occupies 53,844 square feet, and Gordon & Rees, which takes up another 50,194 square feet.
By all accounts, this building is said to have strong income, as well. There is a chance to add some value in the future through leasing up some of the empty space or an expansion or renovation.
Rockpoint does have a commingled fund that targets core plus investments. The real estate fund manager closed a $950 million equity capital raise in September for its Rockpoint Core Plus Real Estate Fund. Two of the investors in the fund were a $100 million commitment from the Oregon Public Employees Retirement Fund and $50 million from the New York State Teachers Retirement System.
275 Battery Street is considered to be part of the North Financial District sub-market in San Francisco. This part of the city totals 116 buildings covering 28.4 million square feet. The vacancy for this sub-market remained at 7.9 percent from the second to the third quarter, according to the 2014 third quarter research & forecast report prepared by the San Francisco office of Colliers International.
Photo courtesy of JLL