(EDITOR’S NOTE: According to public documents, the price on the transaction was $110 million, which is the allocated value of the land for the 80 percent interest in the investment. The 20-story proposed project is slated for 120 units and roughly 20,000 square feet of ground floor retail. JLL declined to comment on the pricing for this deal when contacted for this story.)
Leading Chinese Developer SRE Group Limited (SRE) announced recently that its wholly-owned subsidiary SREUS SF LLC acquired an 80 percent interest in the fully entitled site located at 75 Howard Street in San Francisco, USA from RDF 75 Howard LP. SRE is a subsidiary of China Minsheng Investment Group (CMIG), the largest privately owned investment group in China. RDF 75 Howard LP is an investment fund controlled by Paramount Group, Inc. (Paramount), a publicly-owned real estate investment trust (NYSE:PGRE) headquartered in New York. The 1,860-sqm (20,000 square feet) site currently contains an eight-story fully operating parking garage. The plan is that SRE, Paramount and JBC 75 Howard LLC, an affiliate of The John Buck Company, L.L.C., a renowned developer in the USA, will jointly develop a 20-story mixed-use project containing luxury condominiums and a ground floor restaurant.
JLL, as the Exclusive Sales Agent, has successfully concluded the transaction.
The Property is prominently situated right next to the Embarcadero, in the heart of San Francisco’s burgeoning South Financial District, two blocks away from the Bay Bridge. It boasts close proximity to all forms of public transportation and is only a five-minute walk to the Transbay Redevelopment Plan area, a key infrastructure project that will dramatically improve regional transportation in the Bay Area and throughout California.
The site has all required entitlements, making it the only entitled development site on the City’s waterfront.
Upon its completion, it will fill a void in the market for luxury residential developments in San Francisco. Residential pricing in the city has increased dramatically in recent years due to a severe shortage of housing brought on by record-breaking job growth and a steady influx of new, wealthy residents, particularly in the Bay Area, which is renowned as a global innovation center with all kinds of technology companies gathering together. The market remains very unbalanced while this trend continues.
SRE noted that this new investment is an excellent opportunity for the firm. Through the acquisition, the firm grasped the chance to develop a multi-story luxury property at the waterfront in a global gateway city. It will bring SRE further growth via adding overseas property to the portfolio, which is also aligned with its strategy of diversifying its overall investment portfolio in both geographical and asset type perspectives.
Rob Hielscher, Managing Director of JLL’s Capital Markets Group in the Bay Area, commented that “This transaction illustrates the continued interest from Chinese developers in high profile development sites in San Francisco. 75 Howard is a one-of-a-kind development site on San Francisco’s waterfront and the project will be the city’s premier ultra-luxury condominium development. We are pleased to have facilitated SRE Group’s first investment in the United States and the formation of SRE’s joint venture with Paramount Group and The John Buck Company.”
Flora Wang, National Director of International Capital Group at JLL, noted, “We’re very glad to be able to facilitate the transaction, helping SRE Group lock down this opportunity to develop luxury property in San Francisco where it has the highest concentration of ultra-high net worth individuals. The market is bolstered by high entry barriers and a scarcity of available land, which have in turn limited the inventory of prime luxury condominiums. This property is ideally positioned to fill a void in the market. And we believe this will be a very important and solid step for SRE to enter US market and achieve its business globalization.”