Real estate investment trust Boston Properties is swooping into San Francisco's South of Market with the acquisition of 680 Folsom St., a vacant former AT&T building that TMG Partners and Rockwood Capital are redeveloping as the future headquarters of Macys.com and Riverbed Technology Inc.
The parties involved would not comment on the price, but the property sold for a price expected to be above $300 million in cash and Boston Properties stock.
The sale includes 680 Folsom St., 50 Hawthorne St., and the corner site of 690 Folsom St.
TMG Partners will continue as development manager for 680 Folsom St. and 50 Hawthorne St. and will be responsible for managing ongoing construction at both locations.
When major construction is complete, anchor tenants Riverbed Technology Inc. and Macy’s.com will occupy the majority of 680 Folsom. Macy’s will occupy 242,753 square feet in the top seven floors beginning January 2014 on a 15-year lease while Riverbed will occupy 202,467 square feet on six floors in a 10-year lease.
“As a value-add developer, we decided that with the property 85% leased and construction underway, we could seek out select buyers who recognize the value of securing an asset 2-3 years earlier than would normally be available – and with the trifecta of first class city, building and tenant,” said TMG Partners Chairman and CEO Michael Covarubbias.
When completed, the former Pacific Bell office building, built in 1964 and now under renovation, will house a total of 521,610 square feet of Class A office space. Adding to its San Francisco portfolio of premier office properties, Boston Properties is acquiring the 85 percent-leased building before work is completed.
The 680 Folsom building will be entirely renovated and expanded by two floors. The project will include a new glass curtain wall skin and a new public plaza. TMG is pursuing LEED Gold certification. 50 Hawthorne St. is a 52,000-square-foot, three-story building that will undergo a similar renovation.
Attorney Tony Natsis of Allen Matkins Leck Gamble Mallory & Natsis represented the buyer in the transaction. "It was a very complicated deal that involved loan issues, development issues, entitlement issues -- every discipline of real estate you could imagine," said Natsis