The new owner is 90 New Montgomery Partners LP, whose principal address is that of John K. Leung of Fremont, CA, according to the California Secretary of State's office. His broker in the transaction was George Kosar with Sperry Van Ness. Kosar tells GlobeSt.com that Leung was able to buy the property despite 21 other offers thanks to an all-cash offer, a very short due diligence period and a prior relationship with the seller.
The South Financial District property came on the market in October, a few months after the $7.3-billion merger was complete. There was no asking price and the offer deadline was Oct. 31. Kosar says Leung tied it up in the third week of October, with an all cash offer and a due diligence period of less than 30 days. Many of the competing buyers were institutions, which typically require a longer due diligence period. "One of the other advantages was that the buyer had previously purchased a property from Great Life and performed, so they felt comfortable with him," says Kosar.
Kosar says Leung, whom he never referred to by name, owns a portfolio of apartments and office buildings, and that 90 New Montgomery is "the buyer's" biggest office purchase to date. "Basically the main reason for the purchase was that the building will do better than his term deposits were doing," says Kosar.
Based on actual nets, Kosar says the capitalization rate on the investment is 9.2%, in part because there are still some tenants in the building paying above-market rents. Between 10% and 15% of the leases in the building expire in each of the next two years, says Kosar, "but most of the tenants with expiring leases have been in there a while." That often means the tenants are more likely to want to stay, but only if their rents are brought back down to market rates, which would drop the cap rate on the investment. There are about 30 tenants in the building, says Kosar.
The building is located just off the intersection of Mission and New Montgomery, between Second and Third streets. Kosar says the 8,800-sf floor plates are desirable for a lot of smaller law firms and accounting firms, as they are able to lease a full floor.
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