(EDITOR’S NOTE: According to sources with direct knowledge of the transaction, the property sold for $42 million, or roughly $1,006 per square foot. The seller was Bridgeton Holdings, which had purchased 41,745 square foot the building in November of 2017 for $27 million, or around $647 per square foot, according to public documents.)
SAN FRANCISCO, CA (May 1, 2019) – The Swig Company of San Francisco and STARS Real Estate Investments (“STARS REI”) of Santiago, Chile have purchased 945 Bryant Street. This is the second joint venture investment between The Swig Company and STARS REI. They became joint venture partners in The Wakefield Building in Downtown Oakland in 2017.
This marks Bridgeton’s second office exit in San Francisco after the Pioneer Building. “We are proud to have added significant value to this asset and will continue to do so across our portfolio by leveraging our entrepreneurial approach, vertically integrated platform, and extensive relationships,” said Atit Jariwala, Bridgeton’s CEO.
945 Bryant Street is a 3-story office building that will soon house the Adult Probation Department of The City and County of San Francisco on a long-term lease for the entire building. This is one of several City departments that are or will be relocating in preparation for the planned renovation of the Hall of Justice Building.
945 Bryant is located in the Eastern Neighborhoods in an area that has been experiencing a lot of new development and property revitalization in recent years. Trammell Crow is constructing a new apartment community next door to 945 Bryant. The immediate neighborhood also houses the headquarters of Airbnb, Zynga and Pinterest.
Bridgeton acquired the building in late 2017 for $27 million to capitalize on the near-term expiration of tenants paying significantly below market rents. At the time, the building was leased to a mix of technology and professional services tenants. “We recognized the opportunity to recapture and re-lease the building at market rents and subsequently negotiated a full building lease to the City and County of San Francisco,” said Bridgeton’s CIO, Akash Sharma.
“We were drawn to potential investments in this part of The City by the transitional character of the neighborhood which continues to improve significantly thanks to investment by some significant tech companies and all the new residents filling the newly constructed apartments,” said Tomas Schoenberg, Executive Vice President of The Swig Company. “945 Bryant represents a good, stable investment leased to a great tenant, The City and County of San Francisco, with whom we look forward to establishing a successful long-term relationship.”
“From a long-term perspective, we believe 945 Bryant is a great fit for our investment program. We are excited about the attractive yield with an investment grade quality tenant, while increasing our exposure to downtown San Francisco in a micro location that continues to rapidly develop and mature,” said Oscar Boettiger, CEO of STARS REI.
The three-story building is fully leased to the City and County of San Francisco for a 20-year term. The City will phase into the building between now and 2020 as in-place tenant leases expire. Substantially renovated in 1999 and 2013, the property has been substantially improved including open floor plans, exposed ceilings, and a private deck. The property sits on a 50,000 square foot lot.
“San Francisco continues to be the most sought-after investment market in the world,” said Kyle Kovac, an executive vice president with CBRE.
The acquisition was financed with a new 10-year loan provided by PNC Bank. Kyle Kovac, Mike Taquino and Giancarlo Sangiacomo of CBRE arranged the transaction. Mike Walker of CBRE arranged the financing. The Chicago office of Greenberg Traurig along with the San Francisco office of Farella Braun+Martel provided legal assistance to The Swig Company and STARS REI.
About The Swig Company:
The Swig Company, LLC is a privately-owned, San Francisco-based real estate operator with an 80 year history of investment, development, partnership and management of commercial real estate properties in major US markets. Founded by Benjamin H. Swig in 1936, The Swig Company is guided by a long-term investment perspective that has proven adept at stewarding investors safely through multiple market cycles. The company’s vertically-integrated operational platform, which includes investment, asset and property management, and leasing expertise, uses flexibility, generational thinking and sensitivity to sustainable practices to stay at the forefront of emerging trends in the commercial real estate industry. For more information, visit: www.swigco.com.
About STARS Real Estate Investments (STARS REI):
Founded in 2009, STARS Investments is an investment management company that handles a privately held financial, private equity and real estate portfolio. STARS REI is a wholly owned subsidiary of STARS Investments, with real estate holdings in the U.S. and the U.K. Its mandate is to preserve and increase the value of the portfolio through three investment principles; one, a long-term investment horizon, which implies consistency and discipline in portfolio construction and low asset turnover; two, conservative risk-profile and leverage levels; and three, risk diversification. As of April 2019, the real estate portfolio included office, multifamily and garage holdings in Denver, Boston, Cambridge, Seattle, Washington D.C., New York City, the Bay Area, and London, and totals more than 1.3 million square feet. Stars REI maintains an office in Stamford, Connecticut in addition to its headquarters in Santiago, Chile. For more information, visit: www.starsrei.com.