Transamerica Pyramid’s Surprising Sale: Thriving Icon Sold at Major Loss
Michael Shvo’s six-year investment in the Transamerica Pyramid ended this week with a Cyprus-based buyer stepping in. Yoda PLC completed a multi-part purchase that totaled roughly $691 million, according to public records.
Sale details and pricing
Shvo’s investors originally paid about $650 million in 2020. They also spent roughly $400 million on renovations, pushing total project costs far higher.
Yoda paid about $600 million for the Pyramid itself. That works out to roughly $1,170 per square foot. The other two adjacent buildings and the outdoor park at 535 Washington Street cost $91 million.
Investor fallout and renovation impact
The buyers included Bayerische Versorgungskammer, known as BVK, and Deutsche Finance. BVK is Germany’s largest public pension fund.
Despite public praise for record leases, the project’s incentives reduced net gains. Rent credits and large tenant remodeling allowances cut into projected profits.
Occupancy and development hurdles
The tower reached about 85 percent leased this year. That limited room to boost rental income without changing tenancy strategy.
Two neighboring office buildings on Sansome Street did not command the same rents. One building at 545 Sansome is entitled for redevelopment, but redevelopment would require more capital and remove space from leasing markets.
Market comparisons and financing
Industry observers compared the deal to other recent San Francisco purchases. For example, 300 Howard Street traded for about $111 million, or $265 per square foot.
To finance its acquisition, Yoda took a $300 million loan from San Diego-based Axos Bank. Public filings show the loan underpinned the purchase structure.
Buyer profile and statements
Little public information exists about Yoda, a company with Greek and Israeli ties. CEO Alon Bar said the Pyramid will anchor the firm’s U.S. expansion, according to Filmogaz.com.
Reputation and reaction
Shvo’s handling of the project prompted investor frustration. Some limited partners and executives explored removing him as a partner before choosing to sell.
Industry sources said the Cypriot buyer likely paid a fair, not exceptional, price. The purchase was described as a strong long-term bet, not a bargain buy.
Outlook for the landmark
One developer noted the asset could look excellent in a decade. That assumes the San Francisco office market returns to low vacancy and low interest conditions.
The Transamerica Pyramid has weathered earthquakes, market crashes, and a pandemic. Now the high price tag and future returns are Yoda’s responsibility in this surprising sale of a once-thriving icon sold at major loss for its sellers.
