Paramount Agrees to Acquire Trophy Office Building in San Francisco for $408M
SAN FRANCISCO — Paramount Group Inc. (NYSE: PGRE) has agreed to acquire 55 Second Street, a 387,000-square-foot office building in San Francisco’s South Financial District, for $408 million. The transaction is expected to close in third-quarter 2019. The company expects to bring in a joint venture partner prior to closing.
Developed in 2002, the building sits in the Mission-Market Street corridor and is within one block of the new Transbay Transit Center. The property is currently 87.4 percent leased. KPMG, one of the Big Four accounting firms, serves as the anchor tenant.
The 25-story office building is LEED Platinum certified. A two-story parking garage can accommodate approximately 120 vehicles.
Nuveen Real Estate was the seller, according to the San Francisco Business Times. Hines still serves as property manager after selling the asset in May 2014.
Paramount has been greatly increasing its holdings in San Francisco, closing on the $227 million acquisition of 111 Sutter Street in February. A quote from the company’s CEO, Albert Behler, suggested that recent dispositions in Washington, D.C. are funding the company’s San Francisco expansion. For example, the company sold 2099 Pennsylvania Avenue for $220 million last August and 425 Eye Street for $157 million last October.
“The acquisition of 55 Second Street enables us, once again, to recycle capital opportunistically from Washington, D.C. into one of San Francisco’s most desirable corridors,” says Behler. “With its modern construction, highly efficient floor plates, rich amenity base and proximity to the Transbay terminal, we see tremendous opportunity to fill existing vacancy as well as proactively manage renewals and any potential rollover in a building where in-place office rents are well below market.”
Headquartered in New York City, Paramount is a fully integrated real estate investment trust that owns, operates, manages, acquires and redevelops Class A office properties in select central business district submarkets of New York City, San Francisco and Washington, D.C.
— Kristin Hiller