Sellers Sue For Tax Refund on Unique $38M SF Building Deal

It wasn’t enough that Los Angeles investors Josh and Daniel Sabah could sell a two-story office building in San Francisco’s Jackson Square for $26 million over market value.

Now affiliates of both investors have sued the city to claw back $1.6 million in transfer taxes from the sale of 807 Montgomery Street, the San Francisco Chronicle reported.

The Sabahs seek a tax refund after pocketing three times the assessed value of the 119-year-old brick offices they traded to a mystery buyer in early 2023 for $38 million.

The lawsuit, filed by JDS Montgomery and DLS Montgomery — limited liability companies controlled by the Sabahs that each own a half share in the building — allege the buyer paid a premium of $26 million to purchase the property.

While vacant office buildings in Downtown San Francisco were trading at firesale discounts of less than $300 a square foot, the buyer of the 10,400-square-foot building forked out $3,654 per square foot.

Since an appraisal of 807 Montgomery valued the property at $12 million, the Sabahs allege the $2.3 million transfer tax charged in connection with the building’s sale should have been closer to $660,000.

Their lawsuit seeks a refund of $1.6 million from the transfer tax charge. They petitioned the city for a refund last year but were turned down, according to the complaint. Josh and Daniel Sabah, linked to Synergy Construction, could not be reached by the Chronicle for comment.

A spokesperson for the City Attorney’s Office said it would respond to the lawsuit once it was served.

Former District 3 Supervisor Aaron Peskin, who served as the Jackson Square neighborhood’s longtime representative in City Hall, described the lawsuit as “outrageous, absurd, disgustingly greedy and not supported by the law.”

Whoever bought the building for a premium price is tight with iPhone designer Jony Ive, a tenant who based his “creative collective” design firm, LoveFrom, in the building. Early last year, LoveFrom paid tens of millions for the Little Fox Theatre and nearly the entire block between Columbus and Pacific avenues, and Jackson and Montgomery streets.

“The particular buyer of the (807 Montgomery) property wanted to purchase this specific building between two neighboring properties due to the buyer’s relationship with the neighbor and no building other than the property would suffice for this buyer,” the Sabahs said in their lawsuit.

The buyer of the brick building two years ago was identified by the Chronicle as 807 Montgomery Street, a limited liability company registered to Cristina Rosado of Rosewood Family Advisors, a wealth advisory firm based in Palo Alto.

Rosewood counts Emerson Collective, a private grant-making enterprise founded by Laurene Powell Jobs, the widow philanthropist of Apple co-founder Steve Jobs, among its clients.

San Francisco charges a transfer tax on commercial and residential properties of 5.5 percent on sales above $10 million and 6 percent on sales above $25 million.

— Dana Bartholomew