Rubicon Point Partners acquired a medical office building next door to the University of California, San Francisco’s flagship campus, with plans to turn the property into a state-of-the-art medical facility.
In a deal that closed Tuesday afternoon, Rubicon purchased the nine-story building at 350 Parnassus Ave. in San Francisco in the “mid-$60 millions,” co-managing partner Ani Vartanian told The Real Deal Wednesday. Vartanian declined to disclose the exact purchase price. The seller was a limited partnership of Regency Centers Corp., a real estate investment trust based in Jacksonville, Florida, and Dr. Dean Rider, M.D., whose office is located on the Parnassus Avenue building’s ninth floor.
Rubicon plans to invest a “significant” amount of capital to increase the property’s sustainability and wellness features and make it a “state-of-the-art medical facility” that contributes to “one of San Francisco’s most important healthcare neighborhoods,” Vartanian said in an email statement. The San Francisco-based real estate investment company hasn’t determined how much it plans to spend to renovate its latest acquisition, she said.
Completed in 1968, the building is immediately adjacent to the University of California, San Francisco’s (UCSF’s) 107-acre “Parnassus” campus. The 77,091-square-foot structure is 86 percent leased and has been anchored by UCSF for more than 50 years, according to a Wednesday post on LinkedIn by Newmark’s capital markets division. The university occupies 46,729 square feet, or about two-thirds of the building’s total rentable area, according to a copy of an offering memorandum obtained by The Real Deal.
A Newmark team of Steven Golubchik, Jonathan Schaefler, Darren Hollak and Ben Appel represented the sellers in the transaction, according to Newmark’s LinkedIn post. The team declined comment for this story.
Rubicon was attracted to the Parnassus Avenue building due to its location in a “high-innovation” area, its total square footage and its 220 parking spaces over four levels of parking, Vartanian said. The building “has never changed hands since the original owners built it, so … they are turning the property over to buyers who they believe will be the best next custodian,” she said.
The company acquired the asset through its inaugural fund, Rubicon First Ascent LP, which has the ability to make up to $770 million in office building acquisitions across the Bay Area as well as Puget Sound in Washington. Rubicon said in June that it hoped to make between eight and 12 purchases through the $232 million fund, which pooled cash from large institutional investors such as university endowments and pension funds.
The building at 350 Parnassus Ave. is the type of asset that Rubicon First Ascent LP was made for: Rubicon can add value to it through capital improvements, and it’s the only asset in San Francisco’s Parnassus Heights neighborhood that’s not owned by UCSF, according to Newmark’s offering memorandum for 350 Parnassus Ave., giving the company ownership of a highly desirable property. Moreover, it’s also in a part of San Francisco that’s slated for significant change in the coming decades because of the university’s plans to modernize its campus there.
In January, the governing body of the University of California system approved UCSF’s $3 billion, 30-year plan to expand the Parnassus campus through the construction of 1,263 new housing units for students and a new hospital to replace its existing one. The expansion is projected to add 4,680 permanent jobs and 1,000 temporary construction jobs, making it one of the largest real estate projects on San Francisco’s west side in decades. Construction is expected to begin in 2023, with the new hospital slated to receive patients in 2030.