05/18/2012

Tishman to Buy SF Tower, Seeks Financing

Tishman Speyer has agreed to buy the office building at 650 California Street in San Francisco and is shopping for $130 million of financing.

New York-based Tishman is acquiring the property from investment manager AEW Capital of Boston. Lenders said the loan-to-value ratio on the proposed mortgage would be about 60%, indicating that the purchase price is roughly $220 million.

Tishman is seeking a fixed-rate loan with a term of 7-10 years. Eastdil Secured, which is brokering the sale for AEW, is also advising Tishman on the loan. It is showing the assignment mainly to insurers and other portfolio lenders.

The 492,000-square-foot building, between Kearny Street and Grant Avenue, is regarded as one of San Francisco’s top-tier office properties. Its occupancy rate is 92%. Tenants include law firm Littler Mendelson (111,000 sf until 2016), Credit Suisse (62,000 sf until 2020) and advertising agency Goodby Silverstein (51,000 sf until 2017). Leases on 50% of the space roll over by 2016. That was pitched as a plus for potential bidders because rising demand for office space in the city should provide the opportunity to raise rents as leases expire.

AEW bought the 33-story building in 2007 from Arizona developer William S. Levine on behalf of a client that was believed to be a UBS affiliate. It acquired the building at the top of the market, paying around $300 million.

The Financial District property, previously known as the Hartford Building, was the tallest structure in California when Hartford Insurance developed it in 1964 as its West Coast headquarters.