Columbia Property Trust Recaps $400M San Francisco Asset
- Oct 12, 2020
Columbia Property Trust Inc. and Allianz Real Estate expand their partnership with the recapitalization of 221 Main St., a 381,000-square-foot office building in San Francisco’s South Financial District, via a joint venture transaction that values the fully leased asset at $400 million. Allianz provided $180 million for a 45 percent ownership interest in the joint venture, leaving Columbia to retain a 55 percent stake.
“We felt that the timing of this new venture was favorable, as we believe the current economic environment will provide attractive opportunities to invest the proceeds in new opportunities to create long-term shareholder value with further high-quality acquisitions in our core markets,” Nelson Mills, CEO of Columbia Property Trust Inc., told Commercial Property Executive.
Located just a block from Embarcadero and the Salesforce Transit Center, 221 Main first opened its doors in 1974. Columbia acquired the 16-story building from Beacon Capital Partners for $228.8 million in 2014. At the time, the tower was just 81 percent occupied. Three years and a multimillion-dollar renovation later, the LEED Platinum-certified property is 100 percent leased to a strong roster of predominantly tech tenants, including DocuSign, which expanded its headquarters to 145,000 square feet in 2018. Under the terms of the recapitalization agreement, Columbia will operate as general partner for the joint venture and will also retain responsibility of day-to-day operations at the property.
Columbia and Allianz formed a partnership in July 2017 with the goal of acquiring and managing Class A office assets in key gateway markets across the U.S. The companies contributed three unencumbered assets with an aggregate gross value of approximately $1.3 billion to seed the partnership. Later in 2017, Columbia and Allianz acquired an additional asset, the 581,000-square-foot building at 1800 M St. in Washington, D.C., for $421 million. With the recapitalization of 221 Main, the partnership has amassed a portfolio of five assets in San Francisco, New York and Washington, D.C., with a gross asset value of roughly $2.3 billion.
The partners are undeterred by the pandemic-induced uncertainties in the U.S. office sector today. “While utilization, on average, is likely to remain relatively low for the next several months, strong demand for high-quality property still exists in top markets like New York City, San Francisco and Washington, D.C.,” Mills said. “We’ll continue to be very selective in our investment decisions and will stay focused on creating compelling office environments for discerning tenants.”