Hines Giving Back 333 Bush
Globe St. reports: Values for Bay Area office properties have fallen by approximately 50% during the recession, and rents and occupancies also have suffered mightily. In many cases, the debt on the property is now greater than the value of the property and/or the revenue stream is no longer enough to cover the interest payments on the debt. As a result, instead of investing additional cash in the building in order to cover the mortgage or restructure the debt some owners are choosing simply to sell at a loss or walk away.
Some 15 San Francisco-area office properties are in distress, according to a recent report by Real Capital Analytics. One of those properties was 250 Montgomery. Earlier this month Realty Finance Corp. of Connecticut sold its original $47-million loan on the 15-story, 126,736-square-foot class A office building here for approximately $25 million or $200 per square foot, according to a source familiar with the transaction. The building was completed in 1989 at a cost of about $41 million. The borrower, Lincoln Property Co., paid approximately $47 million or $405 per square foot for the building in late 2006 and defaulted on the loan in late 2008. Prior to the note sale Lincoln agreed to hand over the property to its new creditor in lieu of foreclosure.
Overall availability in the San Francisco office market increased by 40 basis points in the second quarter to 20.2%, according to a quarterly report from CB Richard Ellis that tracks 76.4 million square feet in the market. The last time the combination of direct vacancies and sublease availabilities crested 20% of the market was 2003, amid the aftermath of the dot-com bust.
View the full article on Globe St.: Hines Giving Back 333 Bush
Posted by: Mark Alferman