Assessed by the city of San Francisco to be worth $41 million, 40 Stevenson Street was purchased by Taiwanese real estate investor Steven Pan for $24.2 million, a 40 percent decline from its suggested value. Despite the decline, many believe this is a positive sign that the city’s somewhat dormant investment market is beginning to return to life.
Steven Pan’s newest investment, which he purchased from Invesco, cost him $190 per square foot which is similar to other downtown buildings that have sold in the past six months. 188 Spear Street was purchased in November for $170 a square foot (56 percent drop) and 250 Montgomery Street was sold for $172 a square foot (56 percent drop from previous sale in 2006).
Pan has been ranked No. 34 by Forbes magazine on Taiwan’s Richest 2009 with a net worth of $650 million. He owns hotels and is chairman of the Formosa International Hotels Group. More than 40 years ago, Pan’s father, S.R. Pan, began purchasing several hundred acres in the Bay area along the Alameda shoreline in search of great deals. In 1998, Pan told the Business Times that “If you own a bargain, you have to create value with it. To create value, you don’t just sit on it.”
In the mid-1990s, Pan made his way through San Francisco real estate circles, purchasing a 1-million-square-foot portfolio. Between 1998 and 2000, he sold most of the properties, telling the Business Times, “we’re so used to bargains and now it’s absolutely impossible to find opportunities here.”
Some believe that Asian buyers have “access to cheaper debt than U.S. investors do, and this are willing to settle for lower capitalization rates, which is the ratio of annual net operating income produced by a building divided by its value.”