Swift Real Estate Partners defaulted on a $62.3 million loan related to a 111-year-old office building south of San Francisco’s Market.

The San Francisco-based investor defaulted on a loan related to the eight-story building at 55 New Montgomery Street, San Francisco Business Times reports.

Boston-based lender CrossHarbor Capital Partners recorded a notice of default on the property late last week.

Swift bought the distressed property and restored it, purchasing the building in 2018 for 100,200 square feet $64.25 millionor $641 per square foot.

Nearly a third of the offices in San Francisco’s office market are empty, battered in an era of remote work and high interest rates.

A spokesman for Swift denied that the breach would affect plans for the property, once known as the Salon Building, which is now vacant five years after its purchase.

“The company is in active discussions with all parties regarding the possibility of a resolution,” Swift spokesman Sam Singer told The Business Times. “Swift’s goal remains to complete, lease and operate the project at 55 New Montgomery Street.”

Swift bills the Beaux-Arts building at the new Montgomery and Stevenson streets as a historic “creative office” property with ground-floor retail one block from the Montgomery Street BART/Muni station and across the street from the Palace Hotel , not far from the Moscone Convention Center and the Meadow Gardens.

Default notices — a sign that lenders have the ability to begin foreclosures — have popped up in office buildings, hotels, retail properties and apartment complexes across town.

New York-based Columbia Property Trust defaulted on a $1.7 billion loan backed by a portfolio of seven buildings, including two office buildings at 650 California Street and 201 California Street.

San Francisco-based Veritas Investments, San Francisco’s largest residential landlord, has $1 billion in delinquent loans across its 95 apartment complexes, a third of its portfolio. It bid on its own debt. The company also defaulted on $448 million in loans related to 62 buildings.

Park Hotels & Resorts said it would hand over the keys to the city’s two largest hotels to lenders, as would the French owner of Westfield San Francisco Centre, the city’s largest shopping mall.

Nearly $2 billion in loans will come due this year for office buildings in the city, according to Trepp, and nearly $2 billion next year, heralding other possible defaults.

In February 2022, Swift Real Estate Partners purchased two entertainment production studio buildings in Los Angeles that were undergoing redevelopment for $92.5 million.

In August 2021, Swift bought a 24-story, 565,900-square-foot office tower in downtown Oakland for $327 million, betting on a recovery in the office market. In the first quarter of this year, the city’s office vacancy rate was 32.1%, according to CBRE.

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— Dana Bartholomew

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