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Columbia To Pick Up 201 California For $239M

Columbia Property Trust is under contract to buy 201 California St., a 272K SF office tower in San Francisco's Financial District, for $239M or about $879 per SF, the REIT disclosed on Tuesday.

201 California St.

Columbia expects to close on the 17-story building, which Boston-based Beacon Capital Partners has owned since 2017, by year's end, according to an announcement mentioning the acquisition.

Almost exactly two years ago, Beacon paid  $179M for the asset, property records show. 

Though Columbia is based in New York City and has properties across six different markets, almost 30% of its portfolio value consists of San Francisco assets. That total is not counting its acquisition of 201 California St., according to its website

In June, Columbia Property Trust President Nelson Mills expressed strong optimism for San Francisco's office market.

“It’s a great time to be an office landlord in San Francisco,” Mills said at the time.

The price tag for 201 California is in line with other recent sales amid California's still-simmering office market. In August, WeWork closed on its acquisition of 600 California St. for $331M, or $912 per SF, and Tidewater Capital and Goldman Sachs scooped up 351 California St. for $108M, or $788 per SF, the following month.

In Q3 2019, average asking office rents for Class-A space in the Financial District reached $86.63, up 7.2% from the beginning of the year, according to Cushman & Wakefield.

Though it is 97% leased to multiple tenants, 201 California has high rollover in the coming five years, Columbia said in its announcement. The company says it estimates existing rental rates to be at least 10% below market. Current tenants include First Republic Bank and Dow Jones. 

Columbia's other San Francisco properties include 650 California St., a 33-story, 461K SF office tower it acquired in 2014. 

CORRECTION, Dec. 9, 9:45 A.M. PT: A previous version of this story misstated a previous owner of 201 California St. In 2017, Beacon Capital Partners paid $179M to acquire the property from Regency 201 California LLC. The story has been updated.