55 Second St. was valued at approximately $402 million or $1,039 per square foot.
SAN FRANCISCO—Paramount Group Inc. has completed the acquisition of a 44% joint venture interest in 55 Second St. The property was valued at approximately $402 million or $1,039 per square foot.
In connection with the acquisition, the existing $137.5 million mortgage loan will remain in place and be upsized by an additional $50 million. The $187.5 million mortgage loan is interest only at a fixed interest rate of 3.88% and matures in October 2026.
In an unrelated transaction, the company also announced that it has entered into an agreement to acquire Market Center, a two-building class-A office complex comprising 753,000 square feet, located in the South Financial District. The complex consists of 555 Market St. and 575 Market St., comprising 280,000 square feet and 473,000 square feet, respectively. The purchase price is approximately $722 million or $959 per square foot. The transaction, which is subject to customary closing conditions, is expected to close in the fourth quarter of 2019. In connection with the transaction, the company expects to bring in a joint venture partner prior to closing.
"We continue to opportunistically redeploy capital in one of the most desirable markets in the country at an attractive basis," stated Albert Behler, chairman, chief executive officer and president. "We plan to aggressively manage future rollover at the property, where in-place rents sit well below market in a city with very limited new office supply and strong tenant demand for large-block availabilities."
Located on Market Street with significant frontage to this essential thoroughfare, Market Center is currently 94% leased primarily to technology and professional services tenants. The two buildings are linked by a landscaped garden plaza and elevated walkway, and are located within walking distance of all major local transit systems including the Montgomery BART station, the Transbay Transit Center and the San Francisco Bay Ferry.
Market Center's efficient floorplates with several large base floors position the complex to appeal to a diverse set of tenants. The property offers tenants panoramic views of the city and natural light. The property has an 89-vehicle subterranean parking garage. Market Center is LEED Gold certified, and 555 Market St. and 575 Market St. boast Energy Star ratings of 88 and 93, respectively.
Paramount Group did not respond to requests for added comment.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
