Embrace Real Estate and 1823 Partners surprised even the closest real estate industry observers when they announced last week that they had reached an agreement to purchase Ghirardelli Square. 

The deal, which sources say is valued at around $75 million, stood out for two reasons. Not only was the 12-building complex never publicly marketed for sale, but few in San Francisco had heard of the two firms. 

Now they own one of the city’s most recognizable properties on the waterfront that doubles as a tourist destination. 

For previous owner Jamestown, which took control of the property in 2013 in a foreclosure auction for $54 million, the exit was understandable. The Atlanta-based real estate investor had fixed it up (opens in new tab) and stewarded it through the pandemic. With not much left to do, the company probably saw an opportunity to pass Ghirardelli Square off to a willing buyer and reallocate its resources to maintaining its other San Francisco properties, such as Levi’s Plaza. 

The deal, sources say, started with conversations between Jamestown and a Colorado-based developer called Continuum Partners, which has managed big projects such as Denver’s Union Station. Those talks were widened to include 1823 Partners, which provided the bulk of the financing for the purchase. 

Embrace Real Estate, which was founded last year by an individual with extensive hospitality experience, is now an affiliate of 1823 Partners and was added to co-lead operations and leasing at Ghirardelli Square alongside Continuum. 

So what kind of money does 1823 Partners bring to the table? Turns out the asset management firm has ties to the life insurance industry. 

While 1823 Partners is an independent company, press releases (opens in new tab) and public interviews (opens in new tab) with CEO Anant Bhalla show that it was ostensibly spun off last year from JAB Insurance U.S. Holdings, itself an arm of JAB Holding Company, a German conglomerate headquartered in Luxembourg. 

The 200-year-old JAB has historically invested in consumer goods — including Peet’s Coffee in San Francisco — but over the decades has pushed into the insurance industry. JAB’s insurance companies are making an effort to invest the money they collect in premiums, rather than paying fees to third-party asset managers such as Apollo, KKR, or Blackstone. 

“We are building a private asset manager at JAB that will be only about investing in insurance and owning vertical assets,” Bhalla said at a Semafor business event (opens in new tab) last year. 

“I’m permanent equity, not private equity,” he added. 

Today, in addition to being CEO of 1823 Partners, Bhalla is global head of insurance at JAB Holdings. Before he joined the latter company, he led insurance firm American Equity until its sale to Brookfield in 2023 for $3 billion. 

A spokesperson for 1823 Partners said JAB Insurance is its inaugural client, and Ghirardelli Square is its first investment in San Francisco. 

The deal is, in many ways, a reflection of where the city’s commercial real estate market stands. After years of avoiding San Francisco — fearing financial ruin or uncontrolled street conditions — outside investors with no prior exposure to the city are beginning to see it as a must again.

And if you’re going to say San Francisco is in your portfolio, you might as well start with the property everyone recognizes.