Columbia Property Trust Defaults On $1.7B Office Loan Spanning 4 Cities
Columbia Property Trust has defaulted on a $1.7B loan backing a seven-building portfolio across four states.
The firm, which had been a publicly traded REIT before being acquired by funds managed by PIMCO in 2021 for $3.9B, has already faced some difficulties with its portfolio of office buildings in gateway cities. It sold a Manhattan office building it had fully renovated for nearly $11M less than it paid in a deal that closed two weeks ago.
The seven buildings backing the defaulted loan were appraised for a combined $2.27B in 2021 and are in New York City, Boston, San Francisco and Jersey City, Bloomberg reported. All were saddled with floating rate debt, which has grown increasingly expensive since the Federal Reserve hiked interest rates by 4% in the last year.
The portfolio consists of:
- 650 California, a 471K SF tower in the financial district of San Francisco.
- 229 West 43rd St., the historic 16-story, 934K SF office tower in the Theater District of Manhattan that was home to The New York Times until 2007.
- 245-249 West 17th St., two interconnected buildings totaling 281K SF that are home to Twitter’s offices in Manhattan's Chelsea neighborhood.
- 315 Park Avenue South, a 332K SF tower in Manhattan that was home to the first Amazon Go store in the city.
- 201 California St., a 259K SF 17-story office tower at the corner of California and Front streets in San Francisco.
- 116 Huntington Ave., a 272K SF office building topped with an oculus window in Boston.
- 95 Columbus, a 19-story, 629K SF office tower off Christopher Columbus Drive in Jersey City.
Columbia Property Trust is engaged with lenders to restructure the loans “within our larger national portfolio," spokesperson Justina Lombardo told Bloomberg in an email.
“We, like most office owners, are addressing the unique and unprecedented challenges currently facing our asset class and customer base,” Lombardo said. “We look forward to a collaborative process yielding thoughtful solutions that reflect current market conditions and best serve the interests of all stakeholders.”
The default is the latest evidence that interest rate hikes and dropping real estate values are causing strife among some landlords, particularly those who own older office properties. Commercial property prices have dropped 14% from their peak in March 2022, according to recent analysis by Green Street.
The portfolio’s original $1.9B loan was originated by Goldman Sachs Group, Citigroup and Deutsche Bank AG and included a $485M CMBS, Bloomberg reported.
Earlier this month, Columbia sold 149 Madison Ave., a 127K SF Midtown South building where in 2020 WeWork abandoned its lease after the landlord spent $16M on renovations. The office space at the building was still vacant when the building sold for $77M, less than five years after Columbia paid $87.7M for it in 2017.
