By Jon Peterson
San Francisco-based TMG Partners and Boston-based Alcion Ventures have decided to bring the 184,076 square foot 1550 Bryant office building in the Mission District in San Francisco up for sale.
“The ownership has made all of the planned improvements to the property, have stabilized the asset and completed its business plan, so it’s now the time to sell it,” says Erik Hanson, a senior vice president with Colliers International in its San Francisco office. He, Tony Crossley, an executive vice president, and Frank Wheeler, senior vice president of Colliers will market the building for sale.
The current owners spent $15 million to renovate the property over the past 18 months. This renovation work is now completed. The work involved exterior painting and façade restoration, building lobby upgrades, building system upgrades and creative tenant build-outs. The occupancy of the property was improved from 85 percent to its current level of 94.5 percent.
TMG/Alcion had paid $37 million or around $201 per square foot to acquire the property in May of 2012.
Hanson sees that the property will trade on a square foot basis in the range of where some other recent deals have been done at in downtown San Francisco in recent months. These would include 795 Folsom, which sold for just over $600 per square foot, 410 Townsend, which went for $655 per square foot, and 539 Bryant, which sold for $619 per square foot.
Hanson thinks that just a few kinds of buyers will be interested in the property. “Given that this is a stabilized asset, I would think that the buyers would be pension funds, sovereign wealth funds or REITs. Offers for the property will be taken in December,” said Hanson.
Two of the largest tenants in 1550 Bryant are both technology based companies. One is Asana, a software company. One of its executives was one of the original founders of Facebook. This company occupies more than 40,000 square feet. Rdio, the other tech tenant, is a digital music service company and has a lease that covers more than 20,000 square feet in the property. It was founded in 2010 by Janus Friis, the co-founder of Skype. UCSF also has some space in the property, as well as Devcon Construction.
1550 Bryant is known as The Hamm’s Building. It was built in 1915 by the Rainier Brewing Company and was operated as a brewery until 1975. In 1985 the property went through an extensive renovation and conversion program to an office building.
Alcion was the lead equity partner in the purchase of 1550 Bryant. Its investment was made on behalf of its private equity real estate fund, Alcion Real Estate Fund II. The company had a total capital raise of $497 million completed in early 2010. TMG was the local operating partner involved in the daily operating of the property.