Broadway Partners is preparing to hand One Sansome St. back to Prudential Real Estate Investors, reported by the SF Business Times today. There has been a dark cloud over this property for more than 6 months, and deals have been at an utter standstill.
In recent months, nine downtown San Francisco office properties, totaling more than 2.5 million square feet, have either been foreclosed on by lenders or, in most of the cases, handed over to lenders in lieu of foreclosure in a consensual transaction. We chronicled Morgan Stanley’s recent forfeit of the Glenbourgh portfolio. See our full coverage of the Morgan Stanley saga here. We predicted then that the portfolio in different hands would re-ignite leasing and remove a dark cloud over the properties – This will do the same for 1 Sansome. One of the writers for BayAreaCOmRE represents Citigroup, the largest tenant in the building, and has been following the story closely. 1 Sansome can re-emerge as a strong asset and top tier building in downtown San Francisco.
Broadway attempted to retain the asset back in June. “At the time, Broadway and equity partner Lehman Brothers Holding announced that it had restructured and resolved near-term debt obligations on the 10-property portfolio. Under the agreement, Broadway agreed to contribute capital and retain an ownership interest in a majority of the portfolio, which includes 1000 Wilshire Blvd. in Los Angeles, 116 Huntington St. in Boston and two properties in Virginia. As part of that deal, one of the Broadway properties, 188 Spear St., was deeded to mezzanine lender Prudential Real Estate Investors. Prudential then sold the property to Shorenstein Properties for $25 million, or $173 a square foot.”
Broadway still controls 50 Beale and 100 California Street in San Francisco. It seems we have heard this story time and time again… “Like most of the surrendered properties, One Sansome was purchased near the pinnacle of the building-buying boom. In December, 2006, Broadway Partners, a private real estate investment and management firm headquartered in New York, paid $3.3 billion for a 10-building national portfolio that included four San Francisco properties. While values were never broken out for individuals properties, One Sansome St. was likely valued at more than $600 a square foot, about $350 million, when Broadway bought it. In June of 2008, South Korea-based Mirae Asset MAPS Investment Co. had the property in contract for $365 million, but backed out when the financial crisis worsened that fall.”