SAN FRANCISCO—As GlobeSt.com reported Thursday, 225 Bush St.has changed hands. In an update to that story, welearned that Kylli Inc., a Chinese developmentfirm backed by Genzon Group and its principal, isnow the majority joint venture partner in the sale transaction.

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Flynn Properties and GEM RealtyCapital were the JV sellers. Flynn Properties will remainan investor in the new joint venture as well as the propertymanager and leasing agent for 225 Bush Street.

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Steven Caravelli, an agent at ColdwellBanker Commercial NRT served as one of the brokers on thedeal. He tells GlobeSt.com that he has seen interested in theoffice market here from all types of investors to either break intoor increase their holdings in the financial and SOMA districts ofthe city. “As you have seen rental rates are steadily rising forclass A and class B spaces. I believe the sellers of 225 Bush wereplanning to formally come to market this year and our transactionfit their needs and expectations with minimum disturbance.”

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Flynn Properties and GEM Realty have a long history with 225Bush, having owned it from 2000 to 2005 in partnership withWhitehall-Goldman Sachs. Then, from 2012 until thepresent, Flynn and GEM Realty owned the property with SEBImmoInvest. GEM Realty and SEB sold their entire stakes aspart of the sale transaction.

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“225 Bush Street has the basic real estate characteristics toeffectively capture today's burgeoning creative tenant demandbase,” says Greg Flynn, president and CEO of FlynnProperties. “The business plan we executed in our most recentownership period included refreshing the amenity set whilerepositioning the property to showcase its high ceilings, naturalarchitectural elements, and large floor plates of 26,000 squarefeet, which uniquely support the open plan configurations oftoday's higher density users.”

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JLL identified Kylli Inc. as Flynn Properties'new joint venture partner and provided support on this cross-bordertransaction. “We've seen increasing interest from Chinese buyers introphy office buildings in global gateway cities for several years,with a focus on London and New York to date. This large, off-markettransaction shows that Chinese investors are also aggressivelypursuing class A office buildings on the West Coast of the US” saidRob Hielscher, managing director leading the JLLCapital Markets team.

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As GlobeSt.com previously reported, originally the headquartersof Standard Oil, 225 Bush St. was built in 1922 and is a583,000-square-foot 22-story class A Historic office building inthe San Francisco financial district. The property is located justnorth of Market Street.

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225 Bush was 68% occupied at the time of the Flynn Propertiesand GEM Realty acquisition in 2012, and is currently 99% occupied,stabilized with numerous long term leases.

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Since acquisition, Flynn Properties has secured more than250,000 square feet of new tenancy at the building, includingcompanies such as Lithium Technologies,Groupon, Zillow,Twitch.tv, Meltwater, andRocketSpace, among others. Flynn added, “While theproperty has been stabilized, there remain significant valuecreation opportunities in the years ahead through further propertyenhancement and management of lease expiration, and we are excitedto shepherd 225 Bush Street through its next phase whilemaintaining an ownership position.”

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Natalie Dolce

Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.