Posted by: BayAreaComRE | June 11, 2010

Sourced: 351 California Transfers Ownership to Polidev International

We have confirmed from sources that 351 California Street traded on Thursday to Polidev International, a company headed up by Stanford graduate and Turkish-American businessman Mike Sarimsakci. Not surprisingly, the stalking horse bid of $35,000,000 did not elicit any takers, so the building fell into the hands of the foreign buyer.  The building went to auction for double its worth, by most standards, relative to the market so the buyer must be desperate to place their money in the San Francisco market or invest in a more secure market than their own.

The Business Times spoke with Polidev’s Managing Director, Mike Sarimsakci, who said he is looking to acquire multiple Bay Area properties…He said the building represents a steep discount from office buildings in Istanbul and that it generates solid returns.  “We are not flippers. We like to hold properties as long as we can — at least 20 years,” said Sarimsakci.

351 California is very tired, and needs considerable improvements to compete in this market. Class B, zombie space has been hit very hard in this market, as tenants have taken a flight to quality. There is considerable vacancy in the building (30%), needs significant work, and was overpriced at $35 MM.

J.K. Dineen of the SF business Times summarized the history of the building in their previous article chronicling the pre-sale history of the building. 

“The building has had a colorful recent history. It was previously owned by Brugnara Properties I, a company controlled by real estate investor Luke Brugnara. By early 2009, the building was controlled by Orange County financier Danny Pang’s PEM Group. In April 2009, the U.S. Securities and Exchange Commission seized control of Pang’s properties, including 351 California St., alleging that his companies had defrauded investors of hundreds of millions of dollars. Pang committed suicide in September. The SEC appointed Mosier as receiver for all the Pang properties. In January, Brugnara pleaded guilty to separate charges that he filed false tax returns, and that a dam on a property he owns in Gilroy prevented endangered trout from migrating upstream.”

This reinforces our previous story Bubble in the Capital Markets Drives Up Sales Prices. Additionally, the US, and in particular major US markets like San Francisco, New York, Washington D.C. among others, are now a safe haven for foreign investors as the markets abroad still experiences economic and sociopolitical upheaval.


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