Harvest Properties and Lone Star Funds Form JV to Recapitalize San Francisco Office Tower
The Californer/10347862

SAN FRANCISCO - Californer -- Harvest Properties ("Harvest") and an affiliate of Lone Star Funds ("Lone Star") have formed a joint venture to recapitalize 600 California Street, a 360,000-square-foot Class A office tower in San Francisco's Financial District.

As part of a coordinated strategy, Lone Star finalized the joint venture with San Francisco-based Harvest immediately after acquiring the property through a foreclosure process following its purchase of the underlying debt.  Under the terms of the agreement, Harvest, will have an equity interest in the asset, and serve as operating partner, overseeing day to day operations, leasing strategy and the execution of a targeted repositioning plan.

The joint venture brings fresh equity, active local management and a comprehensive capital improvement program to reposition the asset for the next phase of San Francisco's office market recovery.

"We believe that 600 California is well-positioned to benefit from the improving market dynamics in San Francisco behind further investment and we look forward to partnering with Harvest in this opportunity," said Jérôme Foulon, Global Head of Commercial Real Estate at Lone Star.

The 20-story office tower is characterized by its side core design and gradual setbacks, which provide panoramic views for approximately 80% of the building. Under the new joint venture, the building will be able to compete aggressively as demand returns to San Francisco's top tier office market, according to Harvest Partner Preston O'Connell.

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"600 California has always been a high quality asset, with challenges stemming from ownership instability, not from the real estate itself," said O'Connell. "Now that the market knows there is strong and committed sponsorship with fresh equity and a clear plan, we're already seeing renewed touring activity from prospective tenants ranging from 5,000 to more than 250,000 square feet."

"600 California sits within a select 15% of San Francisco office inventory commanding Bay views," said Harvest Director Alex Kaplan. "Buildings in that cohort are experiencing vacancy rates roughly half that of the broader market, a testament to the durability of tenant demand for premier, well-located space.

Harvest will begin a series of targeted improvements designed to reposition the property and support leasing momentum, including:

• Renovations to the lobby and exterior plaza
• Creation of a 10,000–15,000-square-foot shared amenity floor including state-of-the-art fitness/wellness, tenant lounge and flexible meeting spaces
• Addition of a new exclusive roof deck
• Market ready upgrades to vacant floors

"This investment reflects our conviction that well located, amenitized, high quality office buildings in San Francisco will benefit disproportionately as the market continues to normalize," added Harvest Director Chris Trotier, who will oversee the repositioning of 600 California.

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Harvest Properties has engaged Christopher Roeder, Tom Doupe, Carlye Parker and Lexi Castellino in JLL's San Francisco office as exclusive leasing agents.

About Harvest Properties
Harvest Properties is a vertically integrated, full-service commercial real estate investment firm that specializes in the acquisition, entitlement, development, and management of commercial and residential property, primarily through joint-venture investments in Northern California. For more than 20 years, Harvest has served as an established leader in the marketplace by generating attractive returns for its financial partners, providing creative solutions and outstanding service.  Harvest Properties' portfolio comprises approximately 11.5 million square feet office, industrial, R&D, life science, retail, self-storage and residential properties in the San Francisco Bay Area. For more information, please visit http://www.harvestproperties.com.