San Francisco Office Tower Tied To A $1.7B Loan Default Signs 79K SF Of Leases
A troubled North Financial District office tower has a new lease — or four — on life.
On Monday, Columbia Property Trust said it executed four lease extensions and expansions totaling 79K SF at 650 California St., a 33-story building tied to a $1.7B loan default. The deals lift the asset’s occupancy to 90%, according to the REIT.
Law firm Cleary Gottlieb Steen & Hamilton signed a 24K SF, 11.5-year agreement for the 25th floor and a portion of the 24th floor. The firm subleases roughly 7,200 SF on the 20th floor.
Debevoise & Plimpton, another law firm, extended its lease through 2037 and expanded by 15,800 SF, lifting the law firm’s total footprint to 31,600 SF on the 30th and 31st floors.
A tenant since 2008, consulting firm Analysis Group Inc. extended its nearly 15,900 SF lease on the 23rd floor.
And investment firm HPS Partners nearly doubled its existing footprint at 650 California St. by inking an 8K SF lease for an 11-year term.
Columbia declined to comment on when the transactions closed or the status of the loan default.
Just more than a year ago, Pimco-owned Columbia defaulted on a $1.7B loan collateralizing a 5.5M SF portfolio of seven office buildings, including 650 California St. and 201 California St. in San Francisco, Bisnow reported in May.
The other properties are 315 Park Ave. S., 229 W. 43rd St. and 245-249 W. 17th St. in New York; 116 Huntington Ave. in Boston; and 95 Christopher Columbus Drive in Jersey City, New Jersey.
The default sent the portfolio’s value plummeting 30% from the time the loan closed in December 2021.
Nonetheless, Columbia was able to negotiate new loan terms with its lenders, Goldman Sachs Group, Citigroup and Deutsche Bank AG. Namely, the REIT received an extension on the loan’s maturity date through July 2025 with a six-month extension option.
A $485M slice of that debt was packaged into a CMBS loan, and as part of the extension, the interest rates for certain classes of that loan were reduced. Interest on two classes of A notes was reduced to 0.019%, according to Morningstar, and the $160M B note was reduced to 0%. Payments on the $125M in mezzanine debt were deferred.
The portfolio has another $930M in debt still accruing interest. It is unclear if Columbia has received a new rate cap on the loan since its last one, at about 2.9%, expired in December 2023, when the loan was originally set to mature, The Real Deal reported.
