By Jon Peterson
San Francisco-based Rubicon Point Partners has closed on the acquisition of the 146,000 square foot Parnassus Heights Medical Center in San Francisco located at 350 Parnassus Avenue. The real estate investment firm confirmed that the purchase price was in the mid $60 million range.
The seller of the property was a limited partnership between Jacksonville, Fla.-based Regency Centers Corporation and Dr. Dean Rider, M.D., who has an office located on the ninth floor of the building. Regency had stated in its second quarter earnings report that it owned a 50 percent interest in the property. The public REIT did not respond to a phone call or email seeking comment for this story.
The listing agent on the sale representing the seller was Newmark, and the team involved in the transaction included Steven Golubchik, Jonathan Schaefler, Darren Hollak and Ben Appel. Newmark also did not respond to an email requesting further comment.
Rubicon is planning to invest additional capital into the property in the future. Its goal is to create a state-of-the-art medical facility, although the real estate investment firm has not determined at this time how much capital might be invested down the road.
The main tenant in the property is the University of California, and another tenant is Mindful Health Solutions. There is also a Starbucks coffee retail store in the building and a pharmacy.
Rubicon acquired the property for its commingled fund that goes by the name of Rubicon First Ascent. The real estate manager had raised a total of $232 million of equity for the fund with a final close occurring earlier this year. Two of the investors in the fund were $50 million coming from the Connecticut Retirement Plans and Trust Funds and $30 million from the Pennsylvania State Employees Retirement System. The Pennsylvania Fund also put in $20 million into the commingled fund’s side car fund for co-investment opportunities.
This commingled fund looks to acquire office assets that have a value-add component. At least 75 percent of the fund’s portfolio will be invested in the San Francisco Bay Area. The investment entity is allowed to have up to 25 percent of the portfolio located in areas of Seattle/Tacoma/Bellevue in Washington State or in the Portland metropolitan area.
The targeted returns for the fund are net IRRs in the range of 14 percent to 16 percent. The amount of leverage allowed for the fund is 55 percent to 60 percent with a 70 percent limit loan-to-value.