Essex Buys Fox Plaza in SF for $135M
- Feb 27, 2013
Last year, Essex Property Trust Inc. made more than $800 million in multi-family acquisitions in California and the Seattle area. The REIT is continuing its spending this year, picking up Fox Plaza, a 444-unit property in San Francisco’s Mid-Market district for $135 million from Archstone.
The sale is considered the largest multi-family transaction in the Bay Area in recent years. The 29-story tower has apartments on floors 14 through 29. Commercial office space on floors 1 through 12 were not included in the purchase price, but the sale did include an adjacent two-story building with 37,800 square feet of space that could eventually be developed as a 250-unit, 11-story apartment community. It is currently leased to retail and office tenants and includes a two-story underground parking garage with 405 spaces.
Essex, a Palo Alto, Calif.-based REIT that acquires, develops, redevelops and manages apartment communities, said in a news release that it does not have immediate plans to develop the adjacent site. It does plan to spend $27 million over the next several years to renovate the exterior and interior of the apartment community. About 75 percent of the apartments are studios and the remainder are one- and two- bedroom units.
Built in the 1960s, the prperty is located at 1390 Market St., an area that has recently seen a real estate boom. Essex noted that the Mid-Market district is transforming, particularly with more than 1 million square feet of office space leased to tenants like Twitter and Dolby Laboratories. Cassidy Turley, one of the firms that marketed the property, said in a release that Archstone wanted to take advantage of the hot market. It bought the entire tower in 2005 for $147.5 million. In 2007, it sold the 232,000-square-foot portion of the property that contained offices and retail to Broadreach Capital for $42.7 million, according to Cassidy Turley.
The deal was marketed by David Orozco, formerly with Colliers International and now an agent at Cassidy Turley, and Frank Wheeler of Colliers International. Commercial Property Executive reported in October that Colliers International had been hired by Archstone to sell the property. At that time, it was expected to sell for about $150 million.
Archstone will soon be part of an even bigger deal. Equity Residential and AvalonBay entered into an agreement in November to acquire Archstone from Lehman Brothers Inc. for approximately $16 billion. The sale is expected to close this quarter.
Essex has been particularly busy in the last year. It ended 2012 with $802 million in acquisitions, including $450 million made in the fourth quarter. One of its largest investments in late 2012 was the acquisition of Willow Lake Apartments, a 508-unit apartment community in San Jose, Calif., for $148 million. In January, the REIT added to its Seattle holdings with the purchase of Annaliese, a 56-unit community in the hot South Lake Union submarket of Seattle, for $19 million. Essex President and CEO Michael J. Schall said in the company’s recent year-end filing to the U.S. Securities and Exchange Commission that he expected 2013 to be “another outstanding year for the company.”