Posted by: BayAreaComRE | June 14, 2010

333 Market Sells to Korean Investors – Wells Fargo Has a New Landlord

Principal Financial Group sold 333 Market for over $500 per RSF or $333 million, which is $37 million less than they bought it from Wells Fargo in 2007. Wells Fargo leases the entire building and did a sale lease-back with Principal in July 2007. Wells Fargo now has a lease through 2026. Wells Fargo is a client of one of our writers, and leases 2.5 million square feet throughout San Francisco.

333 Market is a 33 story office building built in 1979 totaling almost 750,000 rentable square feet and 18,500 square feet floorplates.

This transaction should not act as a comparable to sway the market, as the Korean investors paid a huge premium for the fully leased building. Think of it as a treasury, long term hold with consistent gains. On the other hand, this transaction does reveal the demand for strong assets in major markets and the continued influx of foreign capital.

A similar deal happened earlier this year in which CIM bought 211 Main. “The Booth family successfully unloaded 211 Main, the headquarters of Charles Schwab, in their portfolio this week, and our sources indicate the sale closed at $278 per sf, or $112,000,000 which implies an 8.75 % cap rate. Charles Schwab currently pays above market rates through 2018.” (BayAreaComRE)

The 333 Market deal was put together by Goodwin Gaw, a Hong Kong-based investor and developer who recently bought 550 Montgomery St. in San Francisco for $12.65 million, or $134 a square foot. – (San Francisco Business Times).

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