LBA Realty negotiates to buy second SF office building at discount

It could be just talk, but if LBA Realty gets its way, the wrangling over a 182,500-square-foot office building in San Francisco could lead to its second purchase for a rock-bottom price.

The Irvine-based investor is negotiating with Rockpoint Group about buying the 14-story building at 255 California Street, in the Financial District, the San Francisco Business Times reported, citing unidentified sources familiar with the matter. 

The Boston-based Rockpoint bought the post-war building in 2019 for $156.6 million, or $860 per square foot.

LBA Realty hopes to snag it for around $52.9 million, or $290 per square foot. At that price, the Class A building, built in 1959 and revamped in 2022, would trade at a 66 percent discount from its previous sale.

If the deal goes through, it would mark LBA’s second office purchase in San Francisco in eight months. 

In October, LBA bought back an 82,900-square-foot office building at 650 7th Street in Showplace Square from New York-based Blackstone for $25.35 million, or $306 per square foot. 

That’s a nearly 50 percent discount from the $50.47 million Blackstone paid for the building in 2016.

Such cut-rate deals have lured investors back to San Francisco’s office market, with some considering multiple properties — if they can get the right price.

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In August, locally based Presidio Bay Ventures bought a 57-year-old, 157,000-square-foot office building at 60 Spear Street for $41 million, or $260 per square foot. Nine years earlier, it last traded for $680 per square foot.

Presidio says it could buy up three or four similarly positioned properties nearby to create a kind of urban campus.

Since the pandemic, however, no single investor has scooped up multiple investment-grade office buildings in San Francisco.

If the LBA deal closes on 255 California, it could be the first.

— Dana Bartholomew