Fireman's Fund Novato campus sold

PENNSYLVANIA'S TRUST'S PURCHASE A RECORD $283.5 MILLION

NOVATO – A Pennsylvania-based real estate investment trust has quietly purchased Fireman's Fund Insurance Co.'s headquarters campus for $283.5 million, the largest transaction of its kind this year.

The privately brokered deal, which received no local fanfare, edges out Chicago-based Equity Office Properties Trust's nearly $270 million purchase of 1.43 million square feet of office space in 36 North Bay buildings from Petaluma-based Basin Street Properties. It also tops Hines' acquisitions of the 477,000-square-foot Marin Technology Center and 155,000-square-foot San Rafael Corporate Center, both in San Rafael.

American Financial Realty Trust (NYSE:AFR) acquired the 710,000-square-foot Fireman's Fund complex at 775, 777 and 779 San Marin Drive from a group of investors led by Walter Spieker Jr., according to Marin County Recorder's Office records. Mr. Spieker was CEO of Palo Alto-based Spieker Properties before its merger with Equity Office in 2001.

Mr. Spieker had held onto the property during the merger, according to Sondra Courey, vice president of acquisitions for Equity Office.

American Financial typically seeks to purchase properties with long-term leases to regulated financial institutions.

 

Leased through November 2018

Fireman's Fund has occupied the three-building class A office complex since the early 1980s and has a lease on the entire 64-acre campus through November 2018, according to American Financial.

The insurer has 1,100 workers at the facility but has been looking for sublessors for 145,000 square feet of the four-story 777 San Marin building since 2002, as the company reorganized headquarters staffing.

"It's a new owner, but we have the same commitment to the facility," Fireman's Fund spokesman John Kozero said.

 

Kaiser considers space

For the past few years, Kaiser Permanente has been considering a sublease on as much as 90,000 square feet of the building.

Haden Ongaro of Orion Partners is marketing the sublease space, quoting $2.35 a square foot gross per month. The space can be divided to suit tenants needing as little as 7,800 square feet.

At about $400 a square foot, the Fireman's Fund campus sale also set a per-square-foot high watermark for a North Bay commercial property of that size.

"For $400 a square foot, they probably bought it as an income stream because it has so much time left on the lease," observed commercial property broker Steven Leonard of Meridian Commercial.

In fact, American Financial estimated the average capitalization rate for the property over the term of the lease will be 7.82 percent.