Bully bank has been a fun experience and real-life documentation for both Nik and I…a chapter in our lives we won’t forget anytime soon. But we have since, distanced ourselves from the days of the overdrawn atm notifications, fist palming mechanisms, and migraine infested moments of despair… the future is now here and we’ll hope that you will continue reading our blogs over on the new site.
I’m pleased to announce the recent launch of the new company platform http://www.357investments.com

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SFBT excerpt:

Citigroup Center going back to lender

Broadway Partners is preparing to hand One Sansome St. back to Prudential Real Estate Investors, the latest in a series of highly leveraged downtown San Francisco owners who are voluntarily giving distressed properties back to the lender.

In late March, Prudential will take title to the 550,000-square-foot tower, called the Citigroup Center, and has brought on the Barker Pacific Group to manage the property, according to multiple sources familiar with the transaction.

The deal comes on the heels of Morgan Stanley’s decision to transfer five office buildings to AREA Property Partners and Hines’ calculated move to default on 333 Bush St., which paved the way for Brookfield Real Estate Finance to take ownership. In recent months, nine downtown San Francisco office properties, totaling more than 2.5 million square feet, have either been foreclosed on by lenders or, in most of the cases, handed over to lenders in lieu of foreclosure in a consensual transaction.

Like most of the surrendered properties, One Sansome was purchased near the pinnacle of the building-buying boom. In December, 2006, Broadway Partners, a private real estate investment and management firm headquartered in New York, paid $3.3 billion for a 10-building national portfolio that included four San Francisco properties. While values were never broken out for individuals properties, One Sansome St. was likely valued at more than $600 a square foot, about $350 million, when Broadway bought it. In June of 2008, South Korea-based Mirae Asset MAPS Investment Co. had the property in contract for $365 million, but backed out when the financial crisis worsened that fall.

Since then commercial property values have plummeted 30 to 50 percent, depending on the income the building generates. In the current environment, the building would likely be valued between $175 million and $225 million.

Broadway seemed to have found a way to hold on to the portfolio as recently as June. At the time, Broadway and equity partner Lehman Brothers Holding announced that it had restructured and resolved near-term debt obligations on the 10-property portfolio. Under the agreement, Broadway agreed to contribute capital and retain an ownership interest in a majority of the portfolio, which includes 1000 Wilshire Blvd. in Los Angeles, 116 Huntington St. in Boston and two properties in Virginia. As part of that deal, one of the Broadway properties, 188 Spear St., was deeded to mezzanine lender Prudential Real Estate Investors. Prudential then sold the property to Shorenstein Properties for $25 million, or $173 a square foot.

At the time, Broadway said the capital investment would allow it to “maintain the Class A nature of the properties” and will ensure a “stable and positive experience for current and future tenants,” according to a statement from the two companies.

For now Broadway appears to be holding on to 100 California St., as well as to 50 Beale St., which is leased to the Bechtel Group and Blue Shield of California.

One Sansome St. has about 30 percent vacancy with 10 full floors and four partial floors available, according to the CAC Group, which leases the property for the owners. The biggest tenants are Citigroup, the law firm Lewis Brisbois Bisgaard & Smith LLP, and Lumetra Healthcare Solutions.

Diane Olmstead, a managing partner with W3 Partners, said she expects more downtown building owners who have seen their equity evaporate to hand properties over.

“The value of properties is down and that is working terribly against property owners because at the same time net operating income is down and you have few options, if any, for refinancing your loan,” said Olmstead.

For well-capitalized lenders like Prudential, it makes sense to hang onto the building until the market recovers, she said.

“Rather than choosing to sell the property at a significant discount to future values they have the flexibility to earn their way out of a loan, and they will do that by bringing in an outside partner with new equity to operate the property for them,” she said. “The return they will eventually get will be superior than if they brought it to market now.”

Broadway Partners and Prudential declined to comment.

Locations to Close

San Francisco — Marina: 2298 Lombard St.
Oakland – City Center: 1300 Clay St, Ste 169 * relocate / consolidate
Walnut Creek: 1276 S. California Blvd. * relocate / consolidate
Emeryville: 5755 Christie Ave.
Livermore: 2299 Las Positas Road
Menlo Park: 700 El Camino Real, Ste 175

Emeryville continues the biotech base trend …

SFBIZ excerpt:

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Wareham Development has secured entitlements on two new bioscience buildings comprising 300,000 square feet in Emeryville.

The San Rafael-based developer plans to sign at least one tenant before starting construction on either project, according to a company spokesman.

In the last month, city officials separately approved EmeryStation West, a 205,000-square-foot laboratory, office and transit center, and EmeryStation Greenway, a 94,000-square-foot laboratory building.

The projects will sit across the street from each other near the intersection of Hollis and Powell streets close to three other Wareham buildings. In total, the five EmeryStation properties will total more than 1 million square feet.

Wareham entered into exclusive negotiation agreements with Emeryville on both properties, which are redevelopment sites. The developer and the city are still finalizing the development disposition agreement for EmeryStation West.

excerpt:

The Internal Revenue Service has clarified which documentation taxpayers need to submit to claim the first-time and move-up homebuyer tax credit.

While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.

The IRS clarification says: “In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”

For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.

BT excerpt:

Sungevity, which designs custom solar power systems for residences, will move its 54 employees to new offices at Jack London Square, giving the Oakland project and its neighborhood a much-needed boost.

Sungevity, founded three years ago, will take 20,000 square feet in 66 Franklin St. to accommodate rapid growth in its business. The company occupies around 6,000 square feet in Berkeley that it will retain although its headquarters will move to Oakland.

The company looked throughout the East Bay and San Francisco before deciding on Jack London Square. Executives wanted access to public transportation, a central location within the Bay Area, proximity to restaurants and other amenities, as well as good leasing rates.

“We were really attracted to redevelopment and rejuvenation of Jack London Square,” said Danny Kennedy, president of Sungevity. “I’m from Sydney, Australia. … The waterfront is an added benefit, no question. It’s great to look out at the water and the marina and see the sun shining.”

Kennedy declined to say how much the company’s new space will cost. The average asking rate for Class A space in Jack London Square is around $29 per square foot according to CB Richard Ellis.

Sungevity focuses on the selling and marketing of solar panels and became known for its online quote system. The company uses satellite images of roofs to determine panel installation costs instead of sending workers out to measure roofs.

Last fall, it raised $6 million in venture capital funding led by Greener Capital. The company added 24 employees during the last quarter and expects to have at least 70 total by mid-2010. Most of the positions are in sales and customer service.

The company’s new home is in a building with 60,000 square feet of office space and 30,000 square feet of ground floor retail that was renovated as part of Ellis Partners’ $375 million redevelopment project.

Other tenants include Dealey Renton & Associates, an insurance firm, and the English Center, a language institute and Bocanova, a sister restaurant to Market Bar in San Francisco.

The building is next door to a new structure that houses the Jack London Market, set to open this year, and 100,000 square feet of vacant office space.

The East Bay has nurtured or attracted several solar energy-related companies, including Solyndra in Fremont, Sun Power in Richmond and First Solar, which signed a lease in downtown Oakland last fall.

The founders of Sungevity decided to start their firm in the Bay Area because it is receptive to solar energy, has a large potential customer and employee base, and has a history of software and technological innovation. Another perk is being part of the East Bay Green Corridor, a partnership of several cities.

Todd Graves, Brent Wickam and Shannon Dolan of Cornish & Carey represented Sungevity. Landlord Ellis Partners was represented by Bill Nork and Jonathan Tomasco, also of Cornish & Carey.

Say it ain’t so?? well it seems like it is, It’s been the word for awhile but confirmation now tells the tale, the Dolores Park Playground is scheduled to close for renovations in September. I spend some weekends in the area, really enjoying the park and the local shops/eats. Reopening of the playground area is set for April 2011, the rest of the park will still be closed for construction perhaps until late 2012 according to sources.

“The clubhouse, field, basketball court and six tennis courts will be part of renovations, the roads and pathways, including the pedestrian bridge connecting the park to Church Street at 19th Street, will be restored; and the irrigation, lighting and general landscape will be upgraded and improved.” - ss

The entire project is city-approved with a budget of $11.7 million. We should see a new club house, bathrooms and so forth along side the other upgrades.
Nicolas King, a legislative aide for Supervisor B.Dufty says a small portion of the park will remain open.

*I’m off into the jungle today, checking out two buildings on Pine st. at Van Ness, light industrial zoning is in mind for a client’s smog center needs. Later!

summary of SFBT article:

According to the members of the Association of Foreign Investors per R.E, foreign investor dollars remain firmly gripped around San Francisco, placing it into third place only behind New York and Washington DC.

The 4th quarter survey of 2009 was conducted by James Rasskamp of Wisconsin School of Business, via the 200 members in the association with a cumulative ownership of close to $850B in assets globally, $300B of which lie on U.S soil.

According to data, class A office buildings in SF are still labeled as esoteric, and foreign investors still reflect their preference in top tier territory for investment opportunities. The correlation shows the increase of interest, as 51% of the survey respondents believed the U.S holds the best opportunity for capital appreciation. Boston came in fourth place, and Los Angeles fifth, according to the survey.

As I previously mentioned in the prior entry, just this month, Taiwanese investor Steven Pan bought 49 Stevenson St. for $24.2 million. Pan’s portfolio in the past included other SF buildings like 225 Bush St. and 22 Fourth St.

Pan’s ability to time the San Francisco real estate cycles has made him extremely influential among Taiwanese investors, according to industry brokers. His reentry into the Bay Area is likely to draw other Taiwanese investors back to the city.

“Although foreign investors expressed every intent to resume investing in 2009, like everyone else, their plans were sidelined by a paralyzed marketplace with no precedent and limited investment opportunities,” said Werner Sohier, AFIRE chairman. “However, new money is becoming available and the survey points to an increased focus and interest in a few select markets for 2010, especially London and in the U.S., where prospects appear to be brightening.”

There have been some major, major deals surfacing and coming to fruition in San Francisco’s Financial District, a sign of the times? Perhaps… And with the spotlight back on foreign investors, I need to sharpen my mandarin and play catchup with my uncles and aunties

Taiwanese buyers recently made an acquisition of the 126,110-square-foot 49 Stevenson St. office building signaling a return of foreign investors to this city.

Taiwan-based Pacific Resources bought it out right from a US institutional seller for $24.2 million in an all-cash deal at a price that is approximately 40% below the current assessed value of the office property, according to Grubb & Ellis who brokered the deal.

The Los Angeles-based CIM Group has been on a tear with acquiring distressed cre up here in Northern California, primarily San Francisco, Oakland and Sacramento. Most recently CIM has added the 370,000+ sq ft 211 Main st. building to their portfolio. Main st. currently occupied as Charles Schwab & Co.’s headquarters, with a locked in lease until 2018.

The building was originally developed by the famous Booth Family, part of the 3 building package including 221 Main st. and 101 Howard (all office buildings in the Financial District of SF). According to CAC, who brokered the deals, the packaged price was well below replacement costs.

CIM Group notes that the redevelopment of the Transbay Terminal (as i wrote about here) along with the luxury residences and retailers planned for the neighborhood holds the overall profile of the area and increased the potential for improved asset values.

The CIM Group’s holdings in the Bay Area include other office buildings in San Francisco and approximately 1.7 million square feet of office properties and two hotels in Oakland. It also owns 22 apartment buildings totaling 418 units in San Francisco. CIM are monsters in their own right, having embellished a $100M class A office building in down town Sacramento (470,000 sq ft). These guys are not playing, and it could be wise to be aware of where they allocate and what they acquire. Hotels are being entertained as we break into this new year.

According to Grubb & Ellis reports, the data for the fourth-quarter activity suggests that “the worst is over in San Francisco’s office market,”.

Net absorption turned positive for the first time since the third quarter of 2008. A mixed bag of news for 2010 for landlords as sublease space has seemed to stall which at one point was oversaturating the markets. But many commercial leases are set to expire this year, including big-box financials like Wells Fargo, JPMorgan, and Bank of America.

The ports in Oakland,CA saw their logistic activity upsurge, primarily in imports during the month of December. This turn around ends an 11 month declining streak for the location.

As the nation’s fifth largest, the port released the numbers that showed an 18% increase y.o.y in imported cargo. The total amount of cargo containers for the city in 2009 was 2,051,000. Year over year a 8+% decrease from 2008, but things could be changing.

Hit hard by the global recession, the port has had to cut back on expenses as revenues declined the past two years. Port officials laid off workers and slowed capital expenditures in 2009 for the second straight year. Port officials said they needed to cut operating expenses by $10 million to balance its estimated $280 million budget, which covers the Port of Oakland’s maritime, aviation and commercial real estate divisions.

Big plans are underway overseen by grande developer Phil Tagami, and the city awaits the initial phase of what could be Oakland’s largest project of the new decade.