Landmark Sale in Record Territory
- San Francisco Business Times April 15, 2005
TMG Snares $190m record for historic One Market Street
The Landmark building is under contract for a landmark price -- for $496 per square foot.
The jaw-dropping offer by American Assets Inc. for the One Market St. building is the highest price per square foot ever paid for an office building in San Francisco, except for the trophy Bank of America tower at 555 California St. that went for around the same amount in a two-phase sale last year.
Julie Chase, a spokesperson for owners TMG, confirmed One Market was under contract to American Assets for roughly $500 a foot.
"It's a market deal," said Brandon Taylor, director of corporate finance for American Assets. "It's a Class A irreplaceable asset that's poised to benefit from what we think is going to be a strong return of the downtown CBD San Francisco market."
The privately held San Diego based real estate company, which specializes in retail centers, is also in contract now to purchase 160 King St. in San Francisco for $400 a square foot.
The Landmark's frothy price reflects both the laser-hot investment market that has been scorching historic highs since last year and the unusual property.
The 400,000-square-foot former Southern Pacific Railroad headquarters, which sits at Market Street and the Embarcadero, has become increasingly desirable to tenants seeking a waterfront view and easy access to the newly revamped Ferry Building and its eateries.
Following a multi-year $175 million rehabilitation of the historic building, owner TMG packed it full of big-name, big-bucks tenants paying above market rents in 2000, including Microsoft, Del Monte and Salesforce.com. The strong tenant list and long-term leases mean American Assets has assured a solid cash flow for at least the next five years -- a component which Taylor said drew his company to the deal.
According to TMG's Chase, the $190 million total price tag represents both the purchase of the 380,000-square-foot building and the purchase of a leasehold interest from EOP for the 20,000-square-foot annex.
The hefty sum is $10 million more than market sources indicated it could fetch when TMG first considered marketing the building late last year. Secured Capital brokered the transaction.
Taylor said American Assets is interviewing brokers now to handle leasing and management of the Landmark and expects to make a final decision before closing escrow in June.
American Assets is exploring several payment structure options, including defeasance of the existing loan, Taylor said.