Bargain Hunter Eyes Hudson Pacific Property Off Embarcadero

Frontline Realty Capital has a pending deal to buy a 138,400-square-foot office building in San Francisco’s Bayside Village for around $30 million, nearly half its last traded price.

The locally based investor is moving to buy the four-story brick building at 625 Second Street, in Bayside Village west of the Embarcadero, the San Francisco Business Times reported, citing an unidentified source. The seller is Hudson Pacific Properties, based in Los Angeles.

The real estate investment trust listed the 119-year-old brick and timber building last year, seeking between $200 and $250 per square foot, or between $27.7 million and $34.6 million.

Financial terms of the pending deal between Frontline and Hudson Pacific were not disclosed. But a source told the Business Times a Frontline purchase would “track” near the listed price.

Hudson Pacific bought the building in 2011 for $56.4 million, or $408 per square foot.

The Class A building, built in 1906 and renovated in 1999, has exposed timber beams and brick walls, and has the original arched brick doorways and metal sliding fire doors, according to KBS.

The building is now 38.7 percent leased, or more than 60 percent vacant.

A deal would mark the second purchase for Frontline this year. In January, the firm snapped up an 91,000-square foot building in a lender sale at 1440 Broadway in downtown Oakland for $5.5 million, or $60 per square foot, 86 percent less than its previous sale.

Frontline founder Rob Mann described 1440 Broadway as the type of building he wanted to acquire more of: a well-located asset “with significant potential to create value through thoughtful repositioning and patience.”

Frontline Realty Capital, founded in 2016, invests in industrial, retail and office properties in the Bay Area, Inland Empire and select western markets, according to its website.

Hudson Pacific Properties, founded in 2009 by Victor Coleman, owns 2.4 million square feet of property in San Francisco, after a buying spree in the early 2010s, according to a regulatory filing. It’s selling four office buildings for up to $150 million as it struggles with hundreds of millions in financial losses.

— Dana Bartholomew