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Monday, January 11, 2010 -
Taiwanese real estate investor Steven Pan has finalized the purchase of 49 Stevenson St. for $24.2 million, the latest sign that San Francisco's long-dormant investment market is starting to come to life.
The $190-a-square-foot sale price represents a 40 percent decline for the value of the property, which the city currently assesses at $41 million. The seller was Invesco.
The sale price would be consistent with the other two similar second-tier downtown buildings that have sold in the last six months. In November the Shorenstein family bought 188 Spear St. for $170 a square foot, a 56 percent drop from the $385 a square foot, or $56.9 million, the city assessed the 147,000-square-foot property for the last fiscal year. Another Class A financial district building that sold last year, 250 Montgomery St., traded for $172 a square foot, also a 56 percent drop from its previous sale in 2006.
Another Class A financial district building that sold last year, 250 Montgomery St., traded for $172 a square foot, also a 56 percent drop from its previous sale in 2006.
The city's most recent office building sale was 211 Main St., which the CIM Group bought for $112 million, or $300 a square foot. That building fetched a higher price per square foot because it is 100 percent leased to Charles Schwab through 2018.
Dan Cressman, Michael Taquino, and Kyle Kovac of Grubb & Ellis represented Pan. Eastdil Secured represented the seller.
In the mid-1990s Pan cut a wide swath through downtown San Francisco real estate circles, amassing a 1 million-square-foot portfolio with properties like the 700,000-square-foot Pacific Center at 22 Fourth St, and the Chevron building at 225 Bush St. He sold most of his properties between 1998 and 2000, telling the Business Times at the time that “we’re so used to bargains and now it’s absolutely impossible to find opportunities here.”
The San Francisco Business Times reported in December that Pan had the building in contract. At the time TRI Commercial Managing Director Anton Qiu, who has frequently represented Asian buyers interested in San Francisco, predicted that the 49 Stevenson St. sale will be the start of a trend.
“Since last summer I have noticed a lot of the overseas investors who used to be active in the mid-90s are back,” said Qiu.
Qiu said the Asian buyers have access to cheaper debt than U.S. investors do, and thus are willing to settle for lower capitalization rates, which is the ratio of annual net operating income produced by a building divided by its value.
“The local guys were looking 9 cap and foreign buyers looking at a 7 cap,” he said. “The cost of funds makes the difference. They can pay a little more.”
Pan, which Forbes magazine ranks No. 34 on Taiwan’s Richest 2009 with a net worth of $650 million, owns hotels and is chairman of the Formosa International Hotels Group. His father, S.R. Pan, started out in the Bay Area more than 40 years ago, buying up several hundred acres along the Alameda shoreline and looking for good deals.
“If you own a bargain, you have to create value with it,” Pan said in a 1998 Business Times interview. “To create value, you don’t just sit on it.”
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