In line with its 2025 strategy to look for savings and strengthen its balance sheet, Hudson Pacific Properties offloaded 625 Second St. for $28M, half of the 2011 purchase price.
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Frontline Realty Capital and Triyar Realty Group picked up the 138K SF building, which was 38.7% occupied as of the end of 2024. It was the most vacant building in Hudson Pacific’s 2.4M SF San Francisco office portfolio, the San Francisco Business Times reported.
The REIT also has a substantial portfolio of office and studio space in Los Angeles, where the entertainment business continues to struggle in the wake of the pandemic, strikes and contraction in production. The challenging conditions in both California markets contributed to a full-year loss of more than $364M, almost double the $192.1M it lost in 2023.
HPP CEO Victor Coleman outlined the company’s strategy going forward in a press release announcing fourth-quarter earnings. The focus in 2025 is on sales, cost savings and strengthening the balance sheet.
The sale of 625 Second St. is one step toward that goal. The buyers, San Francisco-based Frontline Realty Capital and Los Angeles-based Triyar Realty Group, also acquired 1440 Broadway in downtown Oakland earlier this year for $5.2M. The building sold for $43.5M in 2018.
Frontline’s acquisitions of these distressed office properties are indicative of the company’s strategy of pursuing “well-located assets with significant potential to create value through thoughtful repositioning and patience,” as founder Rob Mann told the San Francisco Business Times.
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