Intercontinental and Harvest Seek to Sell SF’s Kohl Building

Intercontinental Real Estate and Harvest Properties have put a historic 12-story office building in San Francisco’s Financial District up for sale. Its price could reach nearly $30 million.

The Boston- and Oakland-based investors listed the 85,600-square-foot Kohl Building at 400 Montgomery Street for an undisclosed price, the San Francisco Business Times reported, citing a JLL sales brochure.

Two unidentified market sources familiar with the property said the building was priced in the low $300s per-square-foot range. That would put its asking price in the high $20 millions, or nearly two-thirds less than it traded for five years ago.

Intercontinental and Harvest bought the building in 2019 for $77.5 million, or $906 per square foot, 55 percent more than it sold for three years earlier.

In 2016, the same building traded for nearly $50 million, or $582 per square foot.

It’s not clear whether lender pressure motivated Intercontinental and Harvest to market the historic office building for sale.

Webster Bank originated a $31 million loan when Intercontinental and Harvest bought 400 Montgomery in 2019, though the public records don’t include the loan’s maturity date.

Allen Logue, then-director of acquisitions for Intercontinental, said in 2019 his company had been drawn to the building because of major leasing commitments from technology tenants in the North Financial District, “a target location for San Francisco’s fastest growing companies.”

Since then, demand has dropped and the building — 91 percent leased when it traded hands in 2019 — has seen occupancy decline.

Its weighted average lease term, a measure of the length of time left on existing leases, is just over two years, according to JLL, which cites a 69 percent occupancy.

The landmark building, built in 1901 on Montgomery and California streets, survived the 1906 San Francisco earthquake. It was renovated in 2018.

Recent Downtown office building sales in San Francisco have reset the market, according to the Business Journal.

Many such listings are driven by lender pressure, as building owners who acquired properties in the years leading up to 2020 find themselves with looming loan maturities and no viable way to refinance their debt. Often the best option, for both building owners and their lenders, is to bring the property to market.

— Dana Bartholomew