Landlord defaults on $1.7 billion in loans tied to 2 buildings in S.F.
Major office landlord Columbia Property Trust has defaulted on $1.7 billion in loans tied to seven office buildings, including two in San Francisco.
The downtown San Francisco buildings are 201 California St. as well as 650 California St., where Columbia sued Twitter in December for alleged nonpayment of rent.
The default reflects a real estate downturn that is spreading pain among property owners, putting them at risk of losing control of their buildings. Veritas, San Francisco's largest residential landlord, defaulted on loans worth $448 million tied to 62 local buildings last month.
Brookfield Properties recently defaulted on $784 million in loans for two Los Angeles towers. Vornado Realty Trust and partners also defaulted on a $450 million loan tied to a Manhattan building.
Remote work has prompted many companies to cut back on office space and seek subtenants, and further belttightening in the tech industry has led to an anemic office market in San Francisco. The city's office vacancy rate was a record high 27.6% at the end of last year.
Columbia said it was in talks with lenders about the buildings, which include five others in New York, Boston and Jersey City, N.J.
“We, like most office owners, are addressing the unique and unprecedented challenges currently facing our asset class and customer base,” a company spokesperson said. “We have engaged with our lenders on a restructuring of our loan on seven properties within our larger national portfolio. We look forward to a collaborative process yielding thoughtful solutions that reflect current market conditions and best serve the interests of all stakeholders.”
Investment management giant PIMCO controls Columbia after acquiring it for $3.9 billion in late 2021.