New York-based REIT Paramount Group Inc. (NYSE: PGRE) said it agreed to acquire One Front Street, a Class A office building in San Francisco’s highly desired Market Street corridor, for $521 million, or $800 per square foot.
Paramount is said to be considering various strategic options in connection with the deal, including bringing in a joint venture partner or selling an asset within its portfolio. The deal is subject to customary closing conditions, and is expected to close by the end of the fourth quarter of 2016.
One Front Street, also known as the Shaklee Terraces, is currently 99.4% leased to a variety of tenants across various industries. The building consists of approximately 651,000 square feet and a 290-space parking garage. The LEED Gold, 38-story property offers the amenities and physical features that San Francisco office tenants demand.
The skyscraper was designed by the famed architectural firm Skidmore, Owings and Merrill LLP (SOM), one of the largest architectural firms in the world. The Shaklee Corporation was headquartered in the tower from 1982, when it was originally completed, until 2000.
The property is located in the heart of San Francisco’s central business district in one of the most desired locations for professional services, financial services and technology tenants. it is within two blocks of the Transbay Transit Center, deemed the “Grand Central Station of the West.”
“We are delighted at the opportunity to add another Class A office building in one of the strongest markets in the country to our trophy portfolio,” said Albert Behler, chairman, chief executive and president.
Paramount expects to increase the net operating income from the property ‘as the existing leases, which are approximately 20% below market, expire,” he added. In addition, the firm is evaluating “certain redevelopment opportunities, which could unlock additional value in the next three to five years.”
Paramount owns, operates, manages, acquires and redevelops Class A office properties located in the central business districts of New York City, Washington, D.C., and San Francisco. Established in 1978 by the late German billionaire Werner Otto, Paramount is one of the largest publicly-owned real estate companies headquartered in New York City.