SAN FRANCISCO — Columbia Property Trust Inc. (NYSE: CXP) has acquired a 16-story, 387,943-square-foot office tower in San Francisco for $229 million. The Class A, LEED Platinum-certified property is located at 221 Main St.
The purchase price includes the company’s assumption of a $73 million interest-only loan secured by the property that matures in May 2017 and bears interest at 3.95 percent.
The $155.8 million cash portion of the purchase price was funded from the company’s $500 million unsecured credit facility and cash on hand. The acquisition is expected to increase Columbia’s leverage, based on debt-to-gross real estate assets, from 29.3 percent at the end of the first quarter to approximately 31.5 percent.
The office tower is currently 81 percent occupied and is expected to have a first-year, in-place net operating income (NOI) of approximately $7 million.
“San Francisco is an important market for us, and over the last two years we have worked to carefully identify acquisitions that could meet our stringent underwriting criteria,” says Nelson Mills, president, CEO and director of Atlanta-based Columbia.
“221 Main Street offers a compelling opportunity to expand in one of the better performing submarkets in the country at a substantial discount to replacement cost. With current vacancy and nearly one-third of the space rolling over before 2017 at in-place rents significantly below market, utilizing our leasing expertise should allow us to substantially increase the NOI from this property over the next three years.”
Located in the Spear Street corridor of downtown San Francisco’s south financial district, the office tower includes views of the San Francisco-Oakland Bay Bridge and Embarcadero, the eastern waterfront roadway of the Port of San Francisco.
The building is also in close proximity to the Transbay Transit Center project, a transportation and housing project focused on creating a transit-friendly neighborhood.
“Our 2014 objectives call for adding a growth layer of value-add and core-plus acquisitions in select primary markets to what we believe is one of the stronger office portfolios in the country,” says Mills.
“The acquisition of 221 Main Street meets these objectives and plays to our strengths by increasing an existing presence in San Francisco, providing an opportunity to leverage demonstrated leasing capabilities, and further concentrating the overall portfolio in CBD markets and multi-tenant office buildings,” adds Mills.
Columbia Property Trust invests in high-quality commercial office properties in primary markets nationwide. The company’s portfolio includes 44 properties, consisting of 60 operational buildings and comprising approximately 17.2 million square feet, located in 13 states and the District of Columbia.
The company’s stock price closed at $27.65 per share on Tuesday. The company began trading in October 2013 at approximately $22 per share.
— Danielle Everson