TMG and Farallon paid $127 million, or $287 per sf, for the asset in September 2006 and then proceeded to invest several million more for a seismic retrofit and exterior skin renovation. The price for the most recent sale, which closed last week, was not disclosed by the parties involved, but a local industry source tells GlobeSt.com that the price topped $400 per sf ($176 million).
The 418,668-sf Hawthorne Plaza complex is located south of Market Street. The larger property, 75 Hawthorne, holds 334,400 sf in 20 stories. It was built in 1987. The other property, 95 Hawthorne, is a five-story building constructed in 1910 (renovated 1990) with 84,200 sf net rentable.
The federal government occupies 73% of the space at Hawthorne Plaza. The largest single government tenant is the Environmental Protection Agency, which leases approximately 260,000 sf through September 2009. As part of the sale, Hines has assumed property management and leasing responsibilities.
"We are confident that we will be able to capitalize on strong underlying market fundamentals as we implement our leasing effort," says Hines VP Cameron Falconer in a prepared statement.
TMG's Matt Field tells GlobeSt.com that while it did not extend the EPA lease prior to the sale, it went along way down the road toward making it happen. The sale price reflected some of that progress, he said.
TMG and Farallon acquired the complex from G REIT, which paid $97 million for it in early 2004. The total annual rental income from Hawthorne Plaza was $10.76 million ($28.49 per sf) at the end of 2005, according to SEC filings by G REIT.
As of the end of the third quarter, vacancy in San Francisco's 24-million-sf South Financial District was 6.4% direct and 10.4% including sublease space, according to Cornish & Carey. The average full service asking lease rate for class B space was $38 per sf.
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