REAL ESTATE - Principal Real Estate Investors has made its acquisition of 333 Market Street its first office building purchase in the central business district of San Francisco.
The real estate manager had its Managing Director Mark Hanrahan work on the transaction. He said, "We have been looking at this market for some time. In our view, San Francisco is one of the top five office building markets in the country. Rents are now moving in the right direction, so it’s a market that looks good in the near term. We do own industrial and office assets in the San Francisco Bay Area markets of Palo Alto and San Jose, so we know the area pretty well."
Principal paid $370 million for the office building. The property totals 655,398 s.f. This was an all-cash transaction. The real estate manager acquired the property for one of its commingled funds that it manages.
Its largest commingled fund is the U.S. Property Account. It has a net asset value of $4.9 billion, as of June 30th. This is a core commingled fund that mostly buys leased office, industrial, retail and office assets in major metropolitan markets across the country.
Principal acquired the property from Wells Fargo. The real estate manager looks at the property as a core asset. The building is currently 100% leased to Wells Fargo for a 20-year term.
The previous owner had put the property through a renovation. The main part of this was an improvement to the lobby.
Principal is looking at a variety of other markets in the Midwest and West for other CBD office deals. These markets would include the likes of Orange County, Los Angeles, Seattle and Chicago.