Prudential's PGIM Set to Offload San Francisco Office Tower for $70M

San Francisco's 18-Story Office Building to Change Hands for $70M

PGIM Real Estate Finance, the real estate division of Prudential Financial, is all set to sell an 18-story office building located in the heart of San Francisco. The deal, which is expected to close at around $70 million, comes after the building's owner defaulted on a $125 million loan.

The Deal in Detail

The property in question is a 252,600-square-foot office building situated at 201 Spear Street in the South Financial District. The buyer, Strada Investment Group, along with an undisclosed equity partner, is acquiring the property at nearly $270 per square foot. Eastdil Secured, a real estate investment banking company, is overseeing the sale.

A Look Back

The Class-A building was previously purchased by a KBS Realty Advisors fund in 2013 for $121 million, translating to $465 per square foot. However, the Newport Beach-based investor announced in August that it was planning to surrender the building back to the lender.

Financial Struggles and Occupancy Woes

The office building, which houses firms such as WeWork and Google, has been grappling with financial difficulties as its occupancy rates and value have plummeted. The building's value has taken a hit due to the downturn in San Francisco's office market, which currently has a third of its offices vacant.

Strada Investment's Portfolio

Strada Investment, established in 2011, has primarily invested in office properties. Among its notable projects is a new campus for Samuel Merritt University in Downtown Oakland and a joint venture with Trammell Crow to redevelop two aging San Francisco piers into offices, housing, and a floating swimming pool.

Conclusion

This sale is yet another example of the changing landscape of Downtown San Francisco's real estate market, where properties are trading hands at significant discounts. It remains to be seen how this trend will shape the future of the city's office market.