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Morgan Stanley Fund Buys Two San Francisco Buildings

August 17, 2004|From Bloomberg News

Morgan Stanley said Monday that its Prime Property Fund unit paid $197 million for two buildings on San Francisco's waterfront that serve as the corporate headquarters for Gap Inc., the biggest U.S. clothing-store chain, and retailer Sharper Image Corp.

The 600,000-square-foot property, called Hills Plaza, is 98.5% leased and was bought from San Francisco-based Shorenstein Co., a closely held real estate investor and manager, New York-based Morgan Stanley said.

The buildings are at 345 Spear St., built in 1989, and 2 Harrison St., built in 1925 as the original Hills Bros. Coffee factory and renovated in 1989.

The offices are within three blocks of a light rail line, two ferry services and a bus terminal. They also are close to the 80 Freeway, Morgan Stanley said.

The property's 1.5% vacancy rate compares with an overall San Francisco central business district vacancy rate of 18.6% in the second quarter, according to real estate services provider Cushman & Wakefield. Hills Plaza is leased "with minimal turnover" through 2010, Morgan Stanley said.

The Prime Property Fund, started in 1973, is managed by Morgan Stanley Real Estate. Since 1991, Morgan Stanley Real Estate has acquired more than $39 billion of property and now manages about $30 billion of real estate assets on behalf of clients.

Morgan Stanley shares rose $1.17 to $48.44 on the New York Stock Exchange.

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