Spanish Private Capital Buyer to Take Pacific Place in San Francisco for $475MM

By Jon Peterson

Ponte Gadea, the real estate arm of a private capital high-net worth capital source based in Spain, has placed under contract for purchase the Pacific Place mixed-use asset in San Francisco for approximately $475 million, according to sources with direct knowledge of the transaction. This level of pricing places the asset trade for around $1,082 per square foot.

The deal has not closed yet, and there is no specific time line about when the deal will be completed.

The seller of the property is J.P. Morgan Asset Management. The real estate investment firm declined to comment for this story.

Pacific Place is a mixed-use asset located at 22 4th Street at the corner of 4th and Market Streets in San Francisco. The property has a combination of office and retail space in the property as well as the ownership of a ground lease for the 198-room Hotel Palomar that runs through 2097.

The office part of the complex totals 235,000 square foot that is fully leased to Intuit. The retail portion of the property covers 204,000 square feet. This space is also fully leased to Trader Joe’s grocery store, Old Navy, Levi’s and the Container Store.

J.P. Morgan has had the property under its control since the summer of 2014. At that time, it had paid $420 million for the asset, as stated by sources with a direct knowledge of the transaction. The real estate investment firm did add some value to the property by bringing in Trader Joe’s to the building as a new retail anchor of the asset.

J.P. Morgan invested in the property through its open-ended commingled fund, the J.P. Morgan Strategic Property Fund. This is a core commingled fund with a gross asset value of $42 billion at the end of 2016. This fund typically buys a mixture of office, industrial, retail and apartment assets in major markets across the country. Its average size deal for the fund is $229 million.

Should Ponte Gadea end up closing on Pacific Place, it would represent its second major purchase of an asset in San Francisco. In September of 2016, this same buyer paid $135 million or $1,365 per square foot to buy the Tiffany’s Building in Union Square.

West Coast Commercial Real Estate News