SAN FRANCISCO-Highridge Partners of Los Angeles has acquired the 14-story, 173,747-square-foot 255 California St. building from Lexington Realty Trust for $42 million in an all-cash transaction. The acquisition of the property, which is in the center of San Francisco's financial district, marks the second purchase in the L.A.-based firm's $500 million office investment program.

The 255 California building is approximately 64% leased to a variety of companies, including professional service and financial firms. Jack Mahoney, Highridge executive vice president, calls the company's new property "an irreplaceable asset in a premier location in the heart of the financial district." He describes the financial district as "a solid office market that has maintained its appeal over decades as a preferred business address."

Located at the corner of California and Battery, 255 California is easily accessed by all of the area's public transportation and is on the California Street Cable Car Line. Mahoney notes that it is within a district that features a host of shopping and dining options.

Designed by Skidmore Owings & Merrill in 1959 as the headquarters for John Hancock insurance, the 14-story building is a leading example of Modern Architecture from that period. Its design was showcased as part of an exhibition on the intersection of buildings and art at the San Francisco Museum of Art, now known as San Francisco Museum of Modern Art.

"The design was so forward-thinking that even by today's standards it is a highly-efficient building," noted Mahoney. He points out that the column-free floors of more than 12,000 square feet allow for a variety of configurations. Over the years the building has undergone numerous interior renovations and system modernizations. A complete seismic retrofit is currently under way and should be completed in the next few months.

Previous Highridge investment in the Bay Area includes the Kaiser Center in Oakland, which it renovated and repositioned, selling it in 2005; and the development of the mixed-use Pacific Plaza in Daly City, which it sold in 2004. Earlier the company invested in a portfolio of office properties with buildings on Pine Street and Sansome as well as the 150 California St. site, which was later developed by Equity Office.

Highridge Partners sold most of it's portfolio in 2006 and 2007 at the peak of the commercial real estate market, which positioned the company as an all-cash purchaser of established class A office properties in mature destination markets. In October 2009 it bought the 3 MacArthur office building in Orange County, CA for $31 million in an all-cash transaction―approximately 30% of its cost to build.