ASB Pays $110M For San Fran Office

SAN FRANCISCO-Those who follow @GlobeStcom on Twitter and @GlobeStLIVE may have seen a post teasing the announcement, but GlobeSt.com has learned thatASB Real Estate Investments has paid $110 million for a LEED Gold-certified class A office building in the South of Market district. That particular district is considered one of San Francisco's strongest sub markets.

Fully-leased,  the six-story, 187,000-square-foot property at 795 Folsom St. features access to the city's mass transit networks and efficient, flexible floor plates with high ceilings attractive to tech companies that fuel demand in the market and prefer creative work space layouts.

The purchase from Cornerstone Real Estate Investments was made on behalf of ASB's Allegiance Fund, a $3.0 billion core, real estate vehicle investing in urban markets with superior real estate fundamentals and in assets which have unique, competitive advantages that drive long-term tenant demand.  

As GlobeSt.com previously reported, Cornerstone bought the property in 2011 for $71 million, which translated to $370 per square foot. The building recently served as the headquarters for online social networking and microblogging service Twitter.  Today tenants in the fully leased property include rapidly growing interactive entertainment company Kabam, telecommunications giant AT&T and workplace solutions group Regus.

"Two years ago, it became clear the revival in the Bay Area high-technology industry was going to put a premium on top tier office buildings like 795 Folsom Street," says John Kennedy, managing director at Cornerstone. “We decided to buy the building and make a series of enhancements to appeal to tech companies who prefer creative workspace layouts.” Kennedy adds that "Cornerstone is on the lookout for similar deals as the opportunities arise.” 

This acquisition follows ASB's recent $54-million purchase of a Washington DC office building, as GlobeSt.com reported, part of the company's portfolio strategy centered on assets with the potential to grow income in the country's leading, supply-constrained urban real estate markets in which demand has steadily increased from corporate and retail tenants. To date in 2013, ASB has purchased a total of $435 million in high street retail and office properties on behalf of the Allegiance Fund in major cities, including San Francisco, New York, Washington D.C., Los Angeles, Chicago, Denver and Miami.

Robert Bellinger, ASB Real Estate's president and CEO, says “795 Folsom is extremely well-positioned to benefit from San Francisco's strong economy led by its well-established tech sector. The property's South of Market location has long been a preferred destination among San Francisco's best office tenants with fantastic access to mass-transit and physical characteristics which can drive tenant demand over the long term.”

Last year ASB acquired 135 Mississippi St. in San Francisco's Potrero Hill submarket on behalf of its Meridian Fund in a joint venture with Union Property Capital. Through its Funds, ASB owns interests in office, residential, retail and industrial assets in Northern California valued at approximately $400 million.