San Francisco Offices Net Leased to GAP Sold For $171 Million

The Australian - October 18, 2005

THE Australian-listed Tishman Speyer Office Fund has made its second acquisition in a month, a $US171.4 million ($228 million) San Francisco office building that houses clothing retailer Gap Inc. The trust, with a market value of $555 million, raised $71 million last night through an institutional placement. The balance will be funded with debt.

The building, near the San Francisco Giants' baseball stadium, is the fund's third San Francisco property. In September, Tishman Speyer made its first foray into Washington DC, buying a suburban office complex for $US88.5 million. The latest acquisition, at 550 Terry Francois Boulevard, in Mission Bay, south of the CBD, is leased to Gap Inc. It is largely occupied by Gap's Old Navy division, which is progressively relocating from other sites in San Francisco, Boston and New York. Tishman Speyer managing director Carl Shannon said it was a new building, in an increasingly dynamic area.

The new building, bought from ProLogis subsidiary Cattelus Development Corp, was acquired on a 6.8 per cent yield (before acquisition costs) and is leased to Gap until 2017. Mr Shannon said significant rental growth was expected in years two and seven under the lease. Sphere: Related Content