Allianz has expanded its allocation to the US real estate sector with the acquisition of a leasehold interest in the historic Ferry Building in San Francisco through a joint venture with Hudson Pacific Properties for $291 million (EUR249 million).
The building is being acquired from Equity Office, an affiliate of The Blackstone Group, by Allianz Real Estate on behalf of several Allianz companies.
The Ferry Building, which includes 192,532 square feet of Class-A office and 75,486 square feet of retail, is located along San Francisco’s popular waterfront Embarcadero at the foot of Market Street, and is one of the city’s most famous landmarks.
The building is 98% leased to top-tier companies, including SS&C Technologies, Inc., Meltwater, Inc., Meritage Group LP and Niantic, Inc., as well as restaurant and retail tenants such as The Slanted Door and Blue Bottle Coffee. The Ferry Building Marketplace, a world-class public food market, is organized along a dramatic indoor street, the Nave, and attracts more than 8.8 million visitors a year.
Hudson Pacific Properties will own a 55% interest in the joint venture and will serve as the managing member and day-to-day operator of the property, while Allianz Real Estate will own a 45% interest. The all-cash transaction was approved by the Port of San Francisco, and the remaining term on the ground lease is 49 years.
“Investing alongside Hudson Pacific Properties, we are pleased to become a part of the history and enduring legacy of this magnificent property,” said Christoph Donner, Chief Executive Officer of Allianz Real Estate of America. “Since it opened in 1898, the Ferry Building has been preserved and improved, evolving into a great architectural achievement. Visitors, vendors and tenants are attracted by its unparalleled offerings. This opportunity forges a strong alliance among like-minded investors that see significant potential in generational real estate. It is our intent to protect and enhance the Ferry Building’s stature, vitality and contributions to the community.”
“The acquisition of the Ferry Building fits perfectly with our strategy of identifying creative ways to improve the performance of exceptional real estate within global centers of tech innovation,” said Victor Coleman, Chairman and CEO of Hudson Pacific Properties. “As a long-term owner-operator of Bay Area real estate, we take our stewardship of this world-renowned San Francisco landmark seriously. We are thrilled about the opportunity to further position the Ferry Building as a premier Class-A office and retail destination through new amenities, activities and events. We are pleased to partner with Allianz on this transaction, and look forward to exploring additional investment opportunities together.”
2017 was a year of record growth for Allianz Real Estate in the US. The year saw in excess of 50 new investments in the market. As at the end of June 2018, the firm’s US AUM had grown to EUR15.6 billion, with EUR4 billion in US deals over the prior 18 month period. Whereas US debt has been sizeable for some time and sat at EUR10.8 billion, the equity book continues to grow steadily and reached EUR4.8 billion. It also deepened its presence by opening an Atlanta office, bringing its presence in the South in line with that of its East & Central regions, run out of New York, and activity in the West, managed out of its office in Los Angeles.