Blackstone Real Estate Partners confirmed this week that its Equity Office affiliate had finalized the acquisition of the two-building Market Center office complex in downtown San Francisco. The sale price was not disclosed.
Formerly known as Chevron Towers when it served as the oil company’s headquarters, the office complex totals 752,738 square feet and was 93% leased at the time of sale. Major tenants include Uber, Tibco Software, PNC Bank and the Bank of San Francisco.
Following the acquisition, Equity Office plans to move its Northern California regional headquarters to the location and begin a major upgrade program that will entail creating new tenant suites more suited for today’s popular creative workspace designs. “The opportunity exists to add value to Market Center with a strong focus on innovation as we deliver a new workplace setting that meets the dynamic needs of today’s companies,” said Frank Campbell, managing director for Equity Office’s western region.
John Hancock Real Estate, the U.S. division of Manulife Financial, sold the two buildings at 555 and 575 Market St. Hancock had owned the property since September 2010 when it acquired the property for $265 million. Considered a bold move at the time, the deal now appears prescient given the six-year boom in San Francisco’s office market.
The 40-story 575 Market St. was built in 1975 and the smaller 555 Market St. in 1964. The buildings, which had served as the headquarters of Chevron Corp. until 2001, were renovated prior to Hancock’s acquisition.
Equity Office will keep CBRE as the leasing representative for the property. The listing team includes Bill Cumbelich, Tom Poggi and Alexis Walsh. Eastdil Secured represented seller John Hancock, while Blackstone was self-represented in the transaction.
The asset will be held by Blackstone Real Estate Partners VIII, an opportunity fund with a total equity of $15.8 billion that focuses on major property acquisitions in the U.S. and Europe. The fund targets returns of 20% gross levered IRR with average leverage between 60% – 65%.
Both the San Francisco Employees Retirement System and the California State Teachers Retirement System have made $150 million in total commitments to the commingled Blackstone fund.
Source: realestate_iq
