The one shopping mall in downtown San Francisco that’s actually thriving in the post-pandemic era will have a new owner before the end of the year.
According to sources familiar with the deal, San Francisco real estate firm TMG Partners has been selected as the buyer of the Metreon, the shopping center that is home to the city’s only IMAX movie theater and downtown’s only Target.
The parties are still negotiating a price for the 312,592-square-foot property at 135 Fourth St., near the Moscone Center. The assessed value by the city is around $150.7 million. A spokesperson for TMG Partners declined to comment.
Private equity firm Starwood Capital Group listed the mall for sale in October. According to marketing materials, the Metreon is more than 90% leased, with Target and AMC comprising 60% of the property’s income. The other tenants are primarily food and beverage businesses, including Super Duper Burgers, Lemonade, and Chipotle, with lease terms averaging eight years. The second and fourth floors are sometimes used as event space.
A sale would see TMG take over the ground lease on the property, as the land beneath is owned by the city and county of San Francisco. That lease expires in 2082.
The Metreon opened in 1999, initially envisioned as a kind of interactive theme park with arcades, toy stores, and a play area meant to resemble “Where the Wild Things Are” by Maurice Sendak.
Sony, the original developer, gave up on the effort and in 2006 sold the property to the Westfield Group and real estate company Forest City Enterprises, which turned it into a traditional shopping center.
The Metreon is the second major retail property in San Francisco that TMG has been linked to this year. Sources say the firm is still in negotiations to purchase a stake in Macy’s Union Square store, a deal that would keep the flagship location at least partially open while other portions of the property are redeveloped.
Macy’s announced last year that it planned to close its store at 170 O’Farrell St. but made its departure contingent on finding a buyer for the property, which it owns.
However, that bidding process was described by a source familiar with the listing as “anemic,” in part because demand for big-box retail was shrinking well before the pandemic, and conventional loans of that size were rare.
Therefore, experts say, a deal for Macy’s would likely involve some form of seller financing, in which TMG would pay in installments rather than taking out a mortgage.