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SAN FRANCISCO-The 153,000-square-foot lease Del Monte Corp. signed recently for the top two floors and several lower floors of One Maritime Plaza could grow to over 200,000 square feet before the long-term lease expires, according to a copy of the lease agreement filed with the SEC subsequent to the announcement. The 10-year commitment could end up being 20 years if the company exercises all extension options. Del Monte has been in San Francisco for more than a hundred years.

The company is relocating, consolidating and expanding its 400-person San Francisco operation from the Landmark at One Market, where it leases 93,000 square feet, and 50 California St., where it leases an additional 19,000 square feet. The term of the new lease begins on April 1 and expires on March 31, 2021, not including two five-year extension options, according to the lease agreement. The expiration of its existing leases at the Land mark and 50 California were not immediately available.

The company is scheduled to be delivered the top two floors on March 1, 2010, followed by the sixth and seventh floors in August 2010 and the second, third and fourth floors in November 2010. It also has options for the ninth and nineteenth floors, as well as the right of first refusal for any space that comes available on the fifth, eighth, 10th, 21st, 22nd and 23rd floors. The ninth-floor is currently occupied by Cushman & Wakefield through mid-2013. Del Monte must give notice of its intent to take down the space one year prior to C&W’s lease expiration. The 19th floor is not expected to be available until 2016.

One Maritime Plaza is a 25-story, 526,464-square-foot [net rentable] office tower at the north end of the Financial District, providing it water views from even the lower floors. It is among the top tier of office buildings in the city. Del Monte omitted the financial terms of the lease from the lease agreement filed with the SEC but local industry sources tell GlobeSt.com Del Monte will be paying a “market lease rate.”

The annualized asking lease rate for the lower floors of One Maritime Plaza is $40 per square foot while the asking rate for the upper floors is $60 per square foot, according to Cornish & Carey Commercial/Oncor International. The average asking lease rates for the top tier of the class A buildings in the city is $37.51 for the lower floors and $52.16 for the upper floors. In addition to base rent, the lease calls for Del Monte to be responsible for insurance costs, maintenance costs and taxes.

“Bringing our San Francisco teams together under one roof is important for Del Monte and its continued growth, and a smart move for us to make financially given the opportunities provided by the current real estate market,” Del Monte Foods chairman-slash-chief executive Rick Wolford said in a prepared statement. “This important step completes our plan to consolidate our headquarters office and marketing functions, to provide a centralized San Francisco location and to enhance our ability to execute our brand-focused strategy. San Francisco is a top U.S. city which enables us to attract top talent and our new One Maritime offices will enhance team work, upgrade our executional efficiency and importantly, provide room to grow.”

One Maritime Plaza is owned by entities of Prime Property Fund LLC, whose members include Morgan Stanley Real Estate Advisor Inc. The leasing assignment is in the hands of Phil Tippett of CB Richard Ellis. Del Monte was represented by CAC Group principals Gary Arabian and Bill Cumbelich, and Glenn Snyder, a partner with the Pillsbury law firm.

The Landmark at One Market is owned by American Assets. The San Diego company paid $190 million in 2005 for the 393,000-square-foot, 11-story office tower at the foot of Market Street and a 44,000-square-foot annex building. It was built in 1916 in as the headquarters for the Southern Pacific Railroad, which occupied the building until 1998. American Assets acquired the property from TMG Partners, which completed a $125-million rehab of the building prior to the sale. The building’s three largest tenants are Salesforce.com (125,663 square feet) Del Monte (101,229 square feet) AutoDesk (91,964 square feet), according to the American Assets web site.

In addition to its office leases in San Francisco, Del Monte owns its primary research and development facility in Walnut Creek, and leases land for its R&D facilities in Terminal Island, CA. The company also owns or leases additional administrative facilities in Pittsburgh, CA. On the industrial side, the company has 17 production facilities and 10 distribution facilities in the US, and three production facilities in other countries. Its production facilities total 5.7 million square feet and are owned. Its distribution centers total 5.3 million square feet, including 1.8 million square feet of owned space.

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