Columbia Property Trust Defaults on $1.7B in Mortgage Notes on Buildings in San Francisco, Across the Country

Columbia Property Trust, San Francisco, Bay Area, New York City, Boston, Jersey City, Pacific Investment Management Company Co, PIMCO, Twitter, Allianz Real Estate of America, Repvblik
Courtesy of Columbia Property Trust

By Kate Snyder

As the San Francisco office market continues to contend with uncertainty related to remote work and rising interest rates, a major office landlord has defaulted on approximately $1.7 billion of mortgage notes on several buildings located across the country, including in the city, according to a report from Bloomberg. Columbia Property Trust is the owner of all seven buildings, which are located in San Francisco, New York City, Boston and New Jersey, according to the Bloomberg report. The properties in San Francisco are located at 650 California St. and 201 California St.

“We, like most office owners, are addressing the unique and unprecedented challenges currently facing our asset class and customer base,” a Columbia Property Trust spokesperson said in a released statement. “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.”

In 2021, Columbia Property Trust was acquired by funds managed by Pacific Investment Management Company Co., a global investment management firm, for $3.9 billion. Representatives at PIMCO declined to comment.

Columbia purchased the 478,000-square-foot office building at 650 California St. in the city’s Financial District for $380.6 million, or approximately $650 per square foot, in 2014. The 33-story tower was constructed in 1964 and has long been considered a landmark of the San Francisco skyline. One of the building’s tenants is Twitter, which is facing multiple lawsuits alleging Twitter’s failure to pay rent at the 650 California office as well as other sites.

Columbia Property Trust acquired the 272,000 square foot building at 201 California St. in 2019, according to previous reporting from The Registry. The purchase price was $239 million, or approximately $878 per square foot. 

Other properties involved in the loan default include 229 W. 43rd St., 245-249 W. 17th St. and 315 Park Ave. South in Manhattan, 116 Huntington Ave. in Boston and 95 Christopher Columbus Drive in Jersey City, N.J.

In another sign of the market’s changing tides, one of Columbia Property Trust’s properties that was previously listed for sale has been pulled from the market, according to an industry source familiar with the property.

Last year, the firm listed on the market for sale its 620,000 square foot office building located at 333 Market St. in San Francisco, which has now been taken off the market. Columbia Property Trust has been the owner of 333 Market since 2012 when it acquired the asset for $395 million. The investment firm later brought in Allianz Real Estate of America into the asset in 2017. At that time the property was valued at $500 million. Columbia Property Trust owns 55 percent of the property, while Allianz owns the remaining 45 percent.

With the uncertainty in the office market, at least one expert believes more situations like the one involving Columbia Property Trust could be to come. Richard Rubin, founder & CEO of Repvblik, an adaptive reuse company focused on commercial real estate, offered his thoughts on the future of the overall office market.

“It’s almost a daily occurrence – default on large mortgages based on the changing lending and ‘ultimate use’ environment,” Rubin said. “When the world has changed as it has over the last three years since the onset of the pandemic, NYC has seen unprecedented office vacancy; this coupled with remote work has seen a number of casualties with more to come, likely lots more to come.”

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