SAN FRANCISCO - The iconic Ferry Building in San Francisco has new owners.
On Monday, the Los Angeles-based Hudson Pacific Properties and the European-based Allianz Real Estate announced they paid $291 million in cash to buy control of the 268,018-square-foot office and retail property.
In a news release, Hudson and Allianz said the "all-cash transaction" was approved by the Port of San Francisco and is expected to close this week. The remaining term on the ground lease is 49 years. Hudson will own 55 percent of the property and Allianz will own 45 percent. The seller in the deal is Equity Office, an affiliate of global investment behemoth Blackstone.
The San Francisco Business Times reports the deal equates to $1,086 per square foot. The Times also reported that some of the leases in the building will expire in the next few years, giving the new owners the opportunity to raise rents and increase cash flow.
“The acquisition of the Ferry Building fits perfectly with our strategy of identifying creative ways to improve the performance of exceptional real estate within global centers of tech innovation,” Victor Coleman, chairman and CEO of Hudson Pacific Properties, said in a statement. “As a long-term owner-operator of Bay Area real estate, we take our stewardship of this world-renowned San Francisco landmark seriously.”
Originally opened in 1898 and restored in 2003, the Ferry Building is an iconic piece of architecture along San Francisco’s waterfront. The four-story building sits on the Embarcadero at the base of Market Street with a public marketplace on the first floor and three floors of office above. More than 14,000 commuters use the ferry services each workday, the Business Times reported.
BCV Architecture + Interiors of San Francisco renovated the original structure in 2002, transforming the building into the marketplace it is today. The firm also designed the many of the tenant stalls within the building.
Equity Office took control of the building in 2003 following a $100 million overhaul with partner Wilson Meany. Blackstone, the biggest U.S. landlord and one of the largest private equity companies, bought Equity Office in 2006, the Business Journal reported.
Bloomberg reported that Blackstone Group put the building up for sale in June 2017, and that it was expected to sell for more than $300 million.
Most of the 192,532 square feet of Class A office is leased up to tenants such as video game maker Niantic Inc., Media software company Meltwater Group, and private equity firm Meritage Group LP.
The 75,486 square feet of retail comprises more than 50 specialty retailers such as Blue Bottle Coffee, Book Passage, Sur La Table, Fort Point Brewery and Cowgirl Creamery.
The new owners told the Business Journal they are exploring ways to enhance the retail such as increasing the frequency of the popular farmer’s market.
EDITOR'S NOTE: This story was updated to reflect the architecture firm that renovated the building in 2002.