The property was brought to market in the spring. The property is encumbered with an assumable $250-million, five-year, interest only (6.1%) mortgage that matures in mid 2012. The closing date, said to be sometime in August, may be tied to the assumption of the loan, though that could not immediately be confirmed.
Citigroup is the largest tenant at 1 Sansome with more than 200,000 sf. The company leased approximately 50,000 sf of the total in early 2003 at a lease rate believed to be in the $30s per sf. Citigroup's leases expire from 2010 to 2015, according to a source familiar with the offering memorandum. Bear Stearns occupies another 10% of the building on a lease that expires in 18 months. Lewis Brisbois Bisgaard & Smith LLP, a national law firm, occupies about 8% of the building on a lease that runs into 2012.
Located at 1 Sansome St., the North Financial District office building is seen as "core-plus" due to its 93% occupancy rate and near-term rollover, which could allow the new owner to raise rents and, therefore, its capitalization rate. In-place rents are said to be well below current asking rates, which are in the $60s per sf. Although the price wasn't achieved, sources told GlobeSt.com in April that a sale price near $400-million would have translated to a sub-6% capitalization rate.
One Sansome was completed in 1984. Broadway Partners acquired the building with its third fund as part of a 24-property portfolio acquisition from Beacon Capital in May 2007. An industry source tells GlobeSt.com that Broadway Partners identified the building as a candidate for early disposition at the time of acquisition. Eastdil Secured has the current marketing assignment.
Broadway Partners also reportedly has Eastdil shopping 50 Beale Street, one of four Downtown San Francisco buildings it acquired from Beacon Capital last year as part of a larger deal. Constructed in 1968 and renovated in 1995 and 2006, the property is 90% leased to tenants like Blue Shield of California, Bechtel and the US Dept. of Education on mostly longer-term leases. A $310-million sale price for the 664,000-sf building would translate to a cap rate in the 5% range. That deal also could include the assumption of the interest-only $230 million loan on the property, which floats 135 basis points above LIBOR and matures in 2012.
The two other Downtown buildings that it acquired are 100 California, a 15-story, 288,000-sf office building, and 120 Howard St., a nine-story 145,000-sf brick-clad building that is being renovated, raised by four floors and renamed 188 Spear St. Chris Roeder and Wes Powell of Jones Lang LaSalle have both listings.
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