Here’s where Goldman Sachs is putting its money in Oakland

HP Investors
By   – Reporter, San Francisco Business Times

Goldman Sachs Group Inc. has completed its first direct investment in Oakland with a downtown office building purchase, said Isaac Abid, the banking giant’s partner on the deal.

Goldman Sachs Asset Management’s Alternative Investments & Manager Selection Group (NYSE: GS), based in New York, was a co-investor in HP Investors’ $19.5 million purchase of the I. Magnin Building in March, said Abid, a partner at HP Investors. Goldman Sachs is an equity partner in the building at 2001 Broadway. Abid wouldn’t disclose the exact financial terms.

Abid said that Goldman Sachs was attracted to the city’s burgeoning office market and wanted to invest in creative office space. Abid also knew Jeff Barclay, a Goldman Sachs managing director, who was also Abid’s business school professor at Columbia University.

“They had been intrigued by Oakland,” said Abid. “They were waiting for the right deal to move forward.” A Goldman Sachs spokeswoman didn’t have immediate comment.

The city of Oakland previously feuded with Goldman Sachs over a 1998 interest rate swap deal that city officials say has cost taxpayers around $4 million per year after interest rates plunged following the 2008 recession. The City Council voted in 2012 to boycott the bank for future city business if it wouldn’t renegotiate the interest rate swap deal.

But now, Goldman Sachs joins other huge global financial companies that have also made recent investments in Oakland real estate as the city’s residential and commercial markets have hit record-high rents. The Blackstone Group (NYSE: BX) and the Carlyle Group (NASDAQ: CG) have also funded housing projects that started construction this year. And the Swiss banking giant UBS AG (NYSE: UBS) bought one of Oakland’s largest office buildings at 1221 Broadway last year.

The wave of institutional capital has made the city a magnet for new investment, but also comes as existing business tenants and residents fear being priced out.