A state bank wants to sell $575 million in bonds to finance an eight-story medical building for UC San Francisco to serve as the anchor of a 2,600-unit office-retail village in San Francisco’s Dogpatch.
The California Infrastructure and Economic Development Bank, or IBank, is marketing the bonds to pay for the 300,000-square-foot medical and life sciences building on a block bounded by Craig Lane and Humboldt, Louisiana and Maryland streets, the San Francisco Business Times reported.
The project, dubbed Block 2, will serve as the centerpiece of a $2 billion, 29-acre development by Associate Capital known as Dogpatch Power Station, which would replace PG&E’s Potrero Power Station, which closed in 2011, and remnants of an old sugar factory.
Plans for the Power Station project include 2,601 homes, 1.6 million square feet of offices and research labs, a 250-room waterfront hotel and 110,000 square feet of shops and restaurants.
Locally based Associate Capital, led by Enrique Landa, won approval in 2020 and completed the infrastructure for the new neighborhood. Three years later, the developer broke ground on 105 units of workforce housing at 1212 Maryland Street, expected to be completed this year.
The firm is expected to break ground on the UCSF building this year and be finished in 2029.
Its byzantine financing might even turn heads on Wall Street.
IBank would sell up to $575 million in tax-exempt, fixed-rate revenue bonds to Goldman Sachs. and loan the proceeds to a nonprofit known as the Campus Facilities Improvement Association, according to the Business Times.
The nonprofit, consisting of UCSF benefactors, then would pay Associate Capital to build Dogpatch Power Station. The nonprofit would execute a ground lease with UC Regents and sublease the facility to Associate, which will receive ongoing rent from the UC Regents.
Got that?
Goldman Sachs will nab the bonds later this month and they would mature in May 2059, according to IBank materials, carrying a true interest rate not to exceed 6 percent.
UCSF used a similar finance structure to fund development of the Sandler Neurosciences Building on its Mission Bay campus and the nearby Nancy Friend Pritzker Psychiatry Building. In 2010, IBank raised $208 million in bond proceeds for the neuroscience building; and $171 million for the psychiatry building in 2017.
— Dana Bartholomew
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