According to Trepp, a group of retail and office buildings near the 12th Street BART station in Oakland have been placed on special service status.
Petaluma-based STG Group, the owner of Oakland City Square, took out a $90 million loan five years ago to refinance the 250,000-square-foot portfolio. The portfolio includes 500 12th Street; 499, 501 and 525 14th Street; and 1200 Clay Street. The loan was divided into two CMBS transactions, both for $45 million. They are scheduled to mature in 2028.
The loan and property were placed on watch after lender Ladder Capital became concerned over the financial health of the properties in summer 2021 after STG failed to meet certain financial prerequisites to keep the loan in good standing.
Occupancy and revenue at Auckland City Square has been falling for years.
Occupancy and revenue at Auckland City Square has been falling for years.
Like many other properties, the pandemic has halted foot traffic and office activity, and negativity has impacted Square Finance. The property’s revenue has fallen about 20% over the past five years due to reduced lease terms, although operating costs have remained the same or higher. Occupancy dropped from 94% in 2019 to 63% in September 2022. Last summer, City Square’s second-largest tenant vacated the property, which leased 14 percent of its square footage.
STG has owned 1200 Clay Street since the early 1990s, according to property records. It bought the 12th and 14th Street properties in 2014 for $62 million.
STG isn’t the only landlord feeling the downturn. According to CBRE’s first quarter report, the Auckland CBD had a vacancy rate of 29 per cent and an availability rate of 32 per cent.
“Office employers have been slow to implement back-to-office policies, and with space utilization remaining below pandemic levels, this dynamic remains one of the biggest obstacles to the office market’s recovery,” the report said.
inquire about rent The decline was the first in years as landlords looked to lure tenants back to the city. However, as interest rates rise, landlords may not be able to service their debts at lower rates, and more properties may require special servicing.
