SAN FRANCISCO-The federal government has taken down just under 71,000 sf at 120 Montgomery, a 430,000-sf class A building that Equity Office Properties Trust is under contract to sell to Hines Interests LP. The long-term lease reportedly drops vacancy in the building to about 19%.

Built in 1955, 120 Montgomery is one of San Francisco’s original skyscrapers. The 25-story building is located near Union Square and mass transit. Without naming a specific tenant, the US General Service Administration leased all of the building’s second, eighth and ninth floors and a portion of the seventh floor.

Shamm Kelly of Colliers International represented GSA. EOP was represented in-house by Ken Young, managing director of leasing. Shamm deferred comment on the details of the lease to the GSA, which has not yet responded to a request for information.

Local sources tell the lease will replace one or more of the leaseholds at 550 Kearney St. According to the GSA’s website, the federal government leases 94,600 sf in the building under four separate leases. Four of the leases, totaling about 80,000 sf, expire over the course of the next 24 months. US Government tenants at 550 Kearney include the US Department of Homeland Security’s District Counsel office, the Western Region headquarters of the US Department of Agriculture’s Food and Nutrition Service, and the US Office of Personnel Management. The Montgomery Street building was one of five EOP buildings Hines and Sterling American Property Inc. placed under contract in the spring for about $400 million, according to local sources. Escrow on the other properties–301 Howard St. and 405 Howard St. in San Francisco, Parkside Towers in Foster City and San Rafael Corporate Center in Marin County–closed during the first half of the year.

The Montgomery Street property was reportedly held out of the sale while some maintenance issues were negotiated away. One source tells that the sale will close within the next 30 days. The purchase price has not yet been announced. EOP holds the property on its books at a cost of about $121 million. It acquired the property for around $116 million in June 2000, according to SEC filings.

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