Hudson Pacific Invests $133M in Office Projects

SAN FRANCISCO-Hudson Pacific Properties has invested $133 million in two office properties here that total nearly 1.6 million square feet. The Los Angeles-based REIT acquired the one-million-square-foot 1455 Market St. office tower for $93 million in a transaction with Bank of America and Strada Investment Group. In a separate transaction, Hudson Pacific invested approximately $40.3 million to acquire 51% of the 581,000-square-foot One and Two Rincon Center office project, which it intends to own in a joint venture with an affiliate of Beacon Capital Partners. The joint venture includes a put/call arrangement for the company to acquire the remainder of the Rincon Center properties for a pre-agreed price, which is projected to occur in the second quarter of 2011. Victor J. Coleman, chief executive officer of Hudson Pacific, said in a statment regarding the transactions: “We identified San Francisco as a primary investment market this year and have actively pursued attractive office property acquisitions such as these since our debut as a publicly traded REIT in June.” One and Two Rincon Center is composed of 482,000 square feet of office and 99,000 square feet of retail. The five-story One Rincon Center and six-story Two Rincon Center, built in 1989, are part of a mixed-use Rincon Center complex that is bounded by Mission, Howard, Spear and Steuart streets in the South Financial District. The project is 80% occupied by premier tenants and remains subject to a $106 million project loan, bearing 6.08% interest, and maturing July 1, 2011.             The 22-story, 1455 Market Street office property, located in the Civic Center area, was originally constructed in 1977 as a build-to-suit for Bank of America. The bank will continue its operations at the property in approximately 836,000 square feet as part of the transaction. Bank of America’s on-going occupancy, together with a 90,000-square-foot lease with the Army Corps of Engineers, and additional retail tenancy, supports a 92% project occupancy of institutional quality.  With the 1455 Market St. acquisition, and assuming the acquisition of the remainder of the Rincon Center properties, Hudson Pacific Properties will own over two million square feet of office properties in San Francisco. In October, the company acquired 222 Kearny St., a 144,440-square-foot, two-building property in the North Financial District. The company also owns 875 Howard St., a 286,000-square-foot office property South of Market across from the Moscone Convention Center.