Some of San Francisco’s top buildings face looming mortgage payment deadlines after the Westfield Mall vacated. Not to worry, says the big landlord.
Despite record-high office vacancies and reduced foot traffic, owners of some of the largest properties are confident in their loan repayments, San Francisco Chronicle reports.
The fourth tallest building in the city is an office tower at 555 California Street, worth more than $1 billion. It is related to a $1.2 billion loan due in May.
The former Bank of America headquarters is owned by New York-based Vornado Real Estate Trust and the Trump Organization, which just extended loan maturities by a year. Goldman Sachs, KKR, Microsoft and Bank of America have all renewed their leases but have not cut jobs.
in a Last month’s earnings callthe executives said “there was never a threat of default. There was never a problem with the loan.”
One Market Plaza, another $1 billion office building at 1 Market Street, is home to Google, Autodesk and Visa. The property, owned by New York-based Blackstone and Paramount Group, had a $975 million mortgage due in February.
Thomas Bravo, GIC and Novo Holdings sign new leases, while Visa and Autodesk also sign new leases Listed Offices Available for Subleasebut rent must be paid until a sublessor is found.
A Blackstone spokesperson told the Chronicle: “One Market Plaza is a premium office asset, approximately 96 percent leased, and has seen more leasing activity than any other major office park in San Francisco since the onset of the COVID-19 pandemic.”
Stonestown Galleria is a 775,000 square foot mall at 3251 20th Avenue with more than 125 stores and restaurants. The property, owned by Brookfield Properties in New York, has a $180 million loan due in October.
But unlike the struggling Westfield Center in San Francisco, foot traffic has surpassed 2019 levels, and new retailers and restaurants are continuing to open.
“We feel reassured that we can resolve our loan maturities,” Brookfield spokeswoman Lindsay Kahn told The Chronicle. “Additionally, Stonestown Galleria remains a destination with a healthy, It has rebounded somewhat since the pandemic.”
While San Francisco’s top office and retail properties are still attracting demand during what brokers call a “shift to prime,” the market faces challenges as loans mature.
“San Francisco has been taking a beating overall,” David Putro, director of commercial real estate analysis at Morningstar Credit, told the paper. “Refinancing has become incredibly difficult for all of the offices.”
With demand weakening and interest rates rising, it has become harder for homeowners to refinance their loans, forcing some to either pay in full or risk foreclosure.
However, owners are confident they can refinance tens of millions of dollars in loans due this fall and in 2024, The Chronicle reported.
These include the owners of the former headquarters of Charles Schwab at 211 Main Street; the Hilton in San Francisco’s financial district at 750 Kearny Street; a building at 212 Stockton Street facing Union Square; SoMa office building at 149.
