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SAN FRANCISCO-Wells Fargo & Co. has sold 333 Market St. to Principal Real Estate Investors for $370 million, or about $596 per sf. The publicly held financial services company has leased back the 620,000-sf building on a long-term, net-lease basis.

Wells Fargo paid $150 million for the 33-story building in the first half of 2005, saying it planned to grow its presence in the building as third-party leases expire. The bank subsequently invested an additional $35 million in the building for a total investment of just under $300 per sf, a company source told GlobeSt.com in July, when the property came to market.

PREI managing director Mark Hanrahan says San Francisco’s office space market has recovered “and we believe it will continue to grow, making this purchase an excellent long term hold… . He describes 333 Market as “prime office space located next to one of the busiest commuter stations in San Francisco.”

The sale price is in line with other recent sales of single-tenant net-leased properties. The Irvine Co. earlier this year paid just over $600 per sf for 560 Mission St., a 665,000-sf Downtown office building net leased to JP Morgan Chase for the next 11 years. In November, Tishman Speyer Office Fund paid about $605 per sf for 550 Terry Francois Blvd., a newer 282,733-sf waterfront office building leased to Gap Inc. through 2017. Wells Fargo has committed to leasing 333 Market St. for 20 years, according to PREI.

Situated on the south side of Market Street, between Beale and Front Street, 333 Market provides immediate access to both the San Francisco Municipal Railway and Bay Area Rapid Transit systems. Jeff Weber with locally based Eastdil Secured had the disposition assignment. Eastdil is the real estate investment banking subsidiary of Wells Fargo & Co.

Wells Fargo acquired two other Downtown San Francisco office buildings in mid 2005. The buildings were 550 California St. and 635 Sacramento St., a two-building 340,000-sf office complex in the city’s Financial District built in 1960. Wells Fargo paid $110 million or $323.50 per sf for the assets. At the time, Wells Fargo leased about half the space in the building but, similar to 333 Market, said it would eventually occupy a majority of the building. All told, Wells Fargo occupies about 2.2 million sf of office space in the city.

PREI is the fourth largest institutional real estate manager in the US based on tax-exempt assets under management. It manages or subadvises $35.4 billion in commercial real estate assets. PREI is real estate group of Principal Global Investors, which is part of Principal Financial Group.

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