China Vanke JV Acquires Pair of San Francisco Commercial Buildings

China Vanke has secured its second joint venture development project in San Francisco, according to an announcement this week by a financial institution which backed a pair of acquisitions by the top mainland developer and its San Francisco-based partner, Align Real Estate.

Square Mile Capital Management LLC announced yesterday that is has arranged a $70 million mortgage for the Vanke JV to acquire two adjacent buildings at 657 and 667 Mission Street in San Francisco, California. The loan also provides funding for the renovation and future leasing of the pair of historically protected commercial structures. The total price of the acquisition was not disclosed.

The acquisition is the latest in a series of US development projects and investments by Shenzhen-based Vanke which pioneered Chinese outbound real estate deals starting with a 2013 San Francisco deal.

Putting a New Top on Historic Buildings

The two Mission Street buildings total 130,000 square feet (12,000 square metres) and are located between 3^rd and Montgomery Streets in San Francisco’s South Financial District. The buildings are said to be only 65 percent occupied at present, with the remaining tenants on short term leases.

While both the six-storey building at 657 Mission and the four storey structure at 667 Mission are historically protected, both sites are also already zoned for development up to 350 feet in height, according to a report in the Bay Area media. A team from the Vanke joint venture is said to have already met with city authorities regarding a potential vertical addition that would join the two buildings at the top.

The site is located less than two blocks from a BART light rail station, and only one block from the new Transbay Transit Center. The project sits next door to the high-end St Regis apartments in a San Francisco neighborhood that has become a centre for development.

Once Vanke starts building it may find familiar neighbors, as the project site is just five minutes walk up Mission Street from the First and Mission project being developed by Beijing-based Oceanwide Holdings. Oceanwide broke ground on that 2.4 million square foot (223,000 square metre) project in December.

Vanke Keeps to the Coasts

The Mission Street project is also just over a kilometre away from Vanke’s first US investment, the Lumina. The condo tower has become a major Bay Area success story since the Chinese giant agreed to enter a $620 million joint venture to developer the tower together with Tishman Speyer in March 2013.

Vanke returned to the US’ west coast again last May when it agreed on a $200 million residential joint venture in Seattle with California-based Laconia Development. Less than one month later, Vanke solidified its plans for future US projects by setting up real estate investment platform Brightstone Capital Partners in New York to facilitate future investments in the US property market.

The property firm founded by entrepreneur Wang Shi has been active in the New York market, developing sites in Manhattan and Brooklyn with local partners, as well as investing alongside major US developers in the city.