March 5 (Bloomberg) -- Zynga Inc., the online-game company that has gained 40 percent since going public in December, agreed to purchase its San Francisco headquarters building for $228 million.
Zynga “swooped in” with a pre-emptive offer as several real estate companies were in discussions to acquire the building in the South of Market area, said Michael Covarrubias, chief executive officer of San Francisco-based TMG Partners, which is selling the property. He declined to name the firms.
The building has about 670,000 square feet (62,000 square meters) of space, and Zynga has deposited $25 million in escrow for the transaction, scheduled for completion in the second quarter, the company said in a regulatory filing. The deposit is nonrefundable and Zynga waived due-diligence provisions, Covarrubias said in a telephone interview.
“They eliminated all the risk for us,” he said.
Zynga moved into its new home base in the city’s technology district last year, seeking to house a workforce that now tops 2,800. The building features a large central atrium, and its lobby is decorated with a 1970s Winnebago motor home and a tunnel lit with color-pulsing LED tubes.
The company now leases about 65 percent of the building’s space, with the rest vacant or occupied by other tenants, according to the filing. Zynga “knows the property well” so it was comfortable eliminating contract provisions that buyers normally require, Covarrubias said.
The announcement was made after the close of regular U.S. trading. Zynga, whose Dec. 15 initial share sale was priced at $10, fell 4.9 percent to $13.97 today in New York. The shares are up 48 percent this year.