SAN FRANCISCO-Hudson Pacific Properties has invested $133million in two office properties here that total nearly 1.6 millionsquare feet. The Los Angeles-based REIT acquired theone-million-square-foot 1455 Market St. office tower for $93million in a transaction with Bank of America and Strada InvestmentGroup. In a separate transaction, Hudson Pacific investedapproximately $40.3 million to acquire 51% of the581,000-square-foot One and Two Rincon Center office project, whichit intends to own in a joint venture with an affiliate of BeaconCapital Partners. The joint venture includes a put/call arrangementfor the company to acquire the remainder of the Rincon Centerproperties for a pre-agreed price, which is projected to occur inthe second quarter of 2011.
Victor J. Coleman, chief executive officer of Hudson Pacific, saidin a statment regarding the transactions: “We identified SanFrancisco as a primary investment market this year and haveactively pursued attractive office property acquisitions such asthese since our debut as a publicly traded REIT in June.”
One and Two Rincon Center is composed of 482,000 square feet ofoffice and 99,000 square feet of retail. The five-story One RinconCenter and six-story Two Rincon Center, built in 1989, are part ofa mixed-use Rincon Center complex that is bounded by Mission,Howard, Spear and Steuart streets in the South Financial District.The project is 80% occupied by premier tenants and remains subjectto a $106 million project loan, bearing 6.08% interest, andmaturing July 1, 2011.

The 22-story, 1455 Market Street office property, located in theCivic Center area, was originally constructed in 1977 as abuild-to-suit for Bank of America. The bank will continue itsoperations at the property in approximately 836,000 square feet aspart of the transaction. Bank of America’s on-going occupancy,together with a 90,000-square-foot lease with the Army Corps ofEngineers, and additional retail tenancy, supports a 92% projectoccupancy of institutional quality.
With the 1455 Market St. acquisition, and assuming the acquisitionof the remainder of the Rincon Center properties, Hudson PacificProperties will own over two million square feet of officeproperties in San Francisco. In October, the company acquired 222Kearny St., a 144,440-square-foot, two-building property in theNorth Financial District. The company also owns 875 Howard St., a286,000-square-foot office property South of Market across from theMoscone Convention Center.

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