Invesco Ltd. (IVZ), which has more than $767 billion under management, agreed to buy a 26-story office tower in San Francisco as the city retains its ranking as one of the most desirable global investment markets.
The acquisition price for 101 Second St. is $291 million, according to a person familiar with the sale who asked not to be identified because the terms are private. At $750 a square foot, it’s San Francisco’s most expensive deal for a stabilized office property in the past year, the person said. The tower at Second and Mission streets, completed in 2000, is 90 percent leased.
“It was a very competitive process but an asset we think makes a lot of sense to own long-term as this location and quality is rarely found in San Francisco,” Greg Kraus, a managing director at Atlanta-based Invesco, said in an e-mail. He declined to comment on the price.
The transaction with seller Hines, based in Houston, is scheduled for completion tomorrow, Kraus said. The deal’s capitalization rate is 3 percent, the lowest of 2013 in San Francisco, said the person familiar with the deal. A cap rate is derived by dividing a property’s net operating income by its purchase price, so it moves down as values rise.
James Buie, chief executive officer for the western U.S. region at Hines, didn’t immediately respond to requests for comment.
San Francisco ranked third, behind London and New York, among the most-favored global office markets for overseas buyers, according to a survey by the Association of Foreign Investors in Real Estate. The city is one of the “powerhouses” for placing capital, the Washington-based trade group said in a statement today.
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