San Francisco’s Transamerica Pyramid Sells for $650 Million

Shvo, Deutsche Finance complete deal amid market uncertainty

Available space has spiked in San Francisco during pandemic

The Transamerica Pyramid, a fixture of San Francisco’s skyline for decades, has a new owner. A group led by New York developer Michael Shvo’s namesake company and Deutsche Finance America said on Wednesday that it had completed its previously announced acquisition of the the building from Aegon NV. The purchase price was $650 million for the 48-story tower and the surrounding complex, including a redevelopment site and a park with a grove of mature redwood trees.

“This iconic tower is an important addition to our portfolio,” Shvo said in a statement. “We’re thrilled to bring this property into its next renaissance.”

The sale marks the first time the skyscraper has sold since it opened in 1972 and comes at a deeply uncertain time for commercial real estate markets. The pandemic has forced many companies to keep workers home and caused them to reevaluate their future office needs. That’s put a chill on property deals nationally.

San Francisco has had one of the most dramatic reversals of any market in the country. Before the pandemic, tech companies were aggressively vying for limited space, driving up rents and helping buildings command premium prices. In recent months, though, the available office space in the city has doubled as companies look to sublease what they’d already rented, according to a report last week from CBRE Group Inc. Between the first and third quarters, rents for Class A offices dropped nearly 8%.

Read more: San Francisco’s Transamerica Tower Selling to NYC Developer

The purchase price for the Transamerica complex — which includes three buildings spanning about 750,000 square feet (70,000 square meters) across three buildings — is a discount from the roughly $700 million that Shvo and Deutsche Finance negotiated before Covid-19 started spreading widely in the U.S. The partners bought the building with a group of European investors, including German pension fund Bayerische Versorgungskammer. JLL advised the seller and worked with the buyers on an acquisition loan.

Completing the deal is an accomplishment for a team that’s been snapping up iconic properties across the U.S. in recent years, including the Coca-Cola building in Manhattan and the Raleigh, Richmond and South Seas Hotels in Miami Beach, Florida. In August, Shvo and Deutsche Finance finished its acquisition of Chicago’s “Big Red” office tower.