Seven Equity Group buys two largely empty SF offices for $65.5M

Seven Equity Group paid $65.5 million for 875 and 899 Howard, a two-building downtown San Francisco office pair, with Genesis Capital Group originating a $51 million acquisition loan, according to Connect CRE, which credits Commercial Search for the debt figure. Hudson Pacific sold roughly 280,000 square feet: the six-story 875 Howard at 188,252 square feet and the three-story 899 Howard at 92,000, both opened in 1920, and 899 Howard is a retail-to-office conversion.

At closing, 875 Howard was 36 percent leased and 899 Howard held no tenants at all, leaving the portfolio about a quarter occupied and the price just under $970 per occupied square foot. Transwestern has the leasing assignment for the buildings at Howard and Fifth, within walking distance of BART and MUNI and close to Interstate 80 and U.S. 101.

The $51 million loan against the $65.5 million price is roughly 78 percent, leaving the lender rather than the sponsor holding the bulk of the basis; with three-quarters of the space dark, that ratio suggests underwriting aimed at the buildings' location and a future repositioning rather than at income in place.

The buildings last traded at $46 million in 2007, when Hudson Pacific bought them from The Reliant Group, making the new price 42 percent higher nineteen years later, which is under 2 percent a year compounded before any adjustment for capital.

Our Sept. 25 report on this sale called it roughly $231 a square foot for a San Francisco leasing option, with Hudson Pacific taking the re-leasing bill off its 2027 calendar. Earlier in September the same seller and Blackstone bought fifteen more months on the Hollywood Media Portfolio's $1.1 billion loan with no paydown, the special servicer choosing duration over title. The month produced two resolutions in the same direction for Hudson Pacific: hand the space to someone else, keep the debt in place.

The per-occupied-foot version of this trade lands in an office market splitting in two. With nearly three-quarters of the square footage carrying no tenant, almost the entire $65.5 million is a claim on space that has yet to be leased, and the claim will be marked at 899 Howard, where 92,000 square feet sit empty and Transwestern holds the sign.