Google Groups no longer supports new Usenet posts or subscriptions. Historical content remains viewable.
Dismiss
More S.F. office buildings are defaulting on mortgages as real estate pain spreads
0 views
Skip to first unread message
Leroy N. Soetoro
Oct 4, 2023, 9:00:05 PM10/4/23
to
https://www.sfchronicle.com/sf/article/office-buildings-default-mortgage-
18392499.php
A growing wave of mortgage defaults is hitting San Francisco office
buildings, an ominous trend for both cash-strapped owners and City Hall,
which faces a looming annual budget deficit that could top $1 billion
within the next few years.
In August, loans tied to three more properties — 222 Kearny St., 995
Market St. and 1045 Bryant St. — went into special servicing, indicating a
default has occurred or is imminent, according to credit ratings agency
DBRS Morningstar.
The moves raise the risk that more buildings will be surrendered to
lenders — as is already happening at the city’s biggest mall, San
Francisco Centre, and two of its biggest hotels, the Parc 55 and the
Hilton San Francisco Union Square.
That could lead to weaker tax revenue, as distressed owners appeal to the
city for lower property assessments, resulting in lower tax bills. Lenders
could also potentially seize buildings and sell them at steep discounts,
lowering valuations.
Remote work has fueled a surge in vacant offices, with 33.9% of the city’s
space, or nearly 30 million square feet, listed for lease or sublease.
Higher interest rates have also made it far more difficult for property
owners to refinance and stave off defaults.
In August, GEM Realty Capital missed a payment on a $23.8 million loan
tied to 222 Kearny St. The downtown office building is partially leased to
once high-flying co-working firm WeWork, which is now in danger of
bankruptcy. Occupancy has dropped from 100% in March 2020 to 73% this past
March, according to DBRS Morningstar. GEM didn’t respond to a request for
comment.
At another office building once occupied by WeWork, 995 Market St.,
Bridgeton Holdings defaulted on a $44 million loan in August and said it
would stop making payments, the Chronicle previously reported.
A $12.5 million mortgage tied to 1045 Bryant St. was transferred to a
special servicer in August. Tech firm Infatics, also known as DroneDeploy,
had leased 86% of the building but left in 2020, according to DBRS
Morningstar.
Property records show PBV VI LLC is the building owner and the company
couldn’t be reached for comment. Presidio Bay Ventures — which just bought
a downtown building at 60 Spear St. in a bet on downtown’s recovery — said
on its website that it renovated 1045 Bryant St. and later sold the
building, though no recent deeds have been filed with the city. Presidio
Bay Ventures didn’t respond to a request for comment.
In June, Swift Realty Partners defaulted on a $62.3 million loan tied to
the Sharon Building at 55 New Montgomery St., built in 1912 and home to
the historic House of Shields bar. Sam Singer, a spokesperson for Swift,
previously said the company was committed to the property and had no new
information on Wednesday.
Some of San Francisco’s most valuable office properties face mortgage
payment deadlines in the coming months, though owners previously expressed
confidence in meeting obligations. Those include 555 California St., the
city’s fourth-tallest building that is partially owned by former President
Donald Trump; One Market Plaza, home to Google and for now, Visa; and 211
Main St., the former Charles Schwab headquarters building.
Reach Roland Li: rola...@sfchronicle.com; Twitter: @rolandlisf
--
We live in a time where intelligent people are being silenced so that
stupid people won't be offended.
Durham Report: The FBI has an integrity problem. It has none.
No collusion - Special Counsel Robert Swan Mueller III, March 2019.
Officially made Nancy Pelosi a two-time impeachment loser.
Thank you for cleaning up the disaster of the 2008-2017 Obama / Biden
fiasco, President Trump.
Under Barack Obama's leadership, the United States of America became the
The World According To Garp. Obama sold out heterosexuals for Hollywood
queer liberal democrat donors.
President Trump boosted the economy, reduced illegal invasions, appointed
dozens of judges and three SCOTUS justices.
18392499.php
A growing wave of mortgage defaults is hitting San Francisco office
buildings, an ominous trend for both cash-strapped owners and City Hall,
which faces a looming annual budget deficit that could top $1 billion
within the next few years.
In August, loans tied to three more properties — 222 Kearny St., 995
Market St. and 1045 Bryant St. — went into special servicing, indicating a
default has occurred or is imminent, according to credit ratings agency
DBRS Morningstar.
The moves raise the risk that more buildings will be surrendered to
lenders — as is already happening at the city’s biggest mall, San
Francisco Centre, and two of its biggest hotels, the Parc 55 and the
Hilton San Francisco Union Square.
That could lead to weaker tax revenue, as distressed owners appeal to the
city for lower property assessments, resulting in lower tax bills. Lenders
could also potentially seize buildings and sell them at steep discounts,
lowering valuations.
Remote work has fueled a surge in vacant offices, with 33.9% of the city’s
space, or nearly 30 million square feet, listed for lease or sublease.
Higher interest rates have also made it far more difficult for property
owners to refinance and stave off defaults.
In August, GEM Realty Capital missed a payment on a $23.8 million loan
tied to 222 Kearny St. The downtown office building is partially leased to
once high-flying co-working firm WeWork, which is now in danger of
bankruptcy. Occupancy has dropped from 100% in March 2020 to 73% this past
March, according to DBRS Morningstar. GEM didn’t respond to a request for
comment.
At another office building once occupied by WeWork, 995 Market St.,
Bridgeton Holdings defaulted on a $44 million loan in August and said it
would stop making payments, the Chronicle previously reported.
A $12.5 million mortgage tied to 1045 Bryant St. was transferred to a
special servicer in August. Tech firm Infatics, also known as DroneDeploy,
had leased 86% of the building but left in 2020, according to DBRS
Morningstar.
Property records show PBV VI LLC is the building owner and the company
couldn’t be reached for comment. Presidio Bay Ventures — which just bought
a downtown building at 60 Spear St. in a bet on downtown’s recovery — said
on its website that it renovated 1045 Bryant St. and later sold the
building, though no recent deeds have been filed with the city. Presidio
Bay Ventures didn’t respond to a request for comment.
In June, Swift Realty Partners defaulted on a $62.3 million loan tied to
the Sharon Building at 55 New Montgomery St., built in 1912 and home to
the historic House of Shields bar. Sam Singer, a spokesperson for Swift,
previously said the company was committed to the property and had no new
information on Wednesday.
Some of San Francisco’s most valuable office properties face mortgage
payment deadlines in the coming months, though owners previously expressed
confidence in meeting obligations. Those include 555 California St., the
city’s fourth-tallest building that is partially owned by former President
Donald Trump; One Market Plaza, home to Google and for now, Visa; and 211
Main St., the former Charles Schwab headquarters building.
Reach Roland Li: rola...@sfchronicle.com; Twitter: @rolandlisf
--
We live in a time where intelligent people are being silenced so that
stupid people won't be offended.
Durham Report: The FBI has an integrity problem. It has none.
No collusion - Special Counsel Robert Swan Mueller III, March 2019.
Officially made Nancy Pelosi a two-time impeachment loser.
Thank you for cleaning up the disaster of the 2008-2017 Obama / Biden
fiasco, President Trump.
Under Barack Obama's leadership, the United States of America became the
The World According To Garp. Obama sold out heterosexuals for Hollywood
queer liberal democrat donors.
President Trump boosted the economy, reduced illegal invasions, appointed
dozens of judges and three SCOTUS justices.
0 new messages