Posted on 07/28/2009 5:01:42 PM PDT by FromLori
From the SF Gate: S.F. tower's owners will forfeit it to lender (ht John, Jay)
The owners of a premier San Francisco office tower plan to forfeit the property to their lenders, the city's second distressed transaction involving a major commercial building in recent weeks ...
Hines and Sterling American Property decided to transfer their interest in 333 Bush St. to the original financers, following the surprise dissolution of law firm Heller Ehrman in September ... The 118-year-old law firm defaulted on its 250,000-square-foot lease, leaving the nearly 550,000-square-foot property 65 percent vacant.
... Hines and Sterling bought the tower for $281 million in 2007, near the top of the market, when it was 75 percent leased.
The partnership is handing the property to Brookfield Real Estate Finance and Munich Hypo Bank ... ... More distressed deals are expected. Nearly three-quarters of Class A office buildings downtown sold between 2005 and 2007 ... Probably another half off sale (or worse) coming up. It is amazing that 75% of downtown San Francisco Class A office building were sold between 2005 and 2007.
Walking away in the City by the Bay will become common. At least it's a nice place to take a walk ...
How’s that hopey changey thing coming for you Pelosi?
I'm sure these guys were all illegal immigrants with no skin in the game too.
I’ve been predicting that homeowners will start doing this, also. We shall see....
Some “Walking Away” music.
parsy.
Well, now we know why illiterate peasants came here from Mexico: to start law firms and buy office buildings.
“Hines and Sterling bought the tower for $281 million in 2007”
What do you want to bet they are big time dimocRAT supporters.
Well does AIG have this one insured with some bogus paper??
which will be met by any new landlords with a certain personal guarantee or LC requirement to lease. All LL’s will know they broke off from the other firm.
Why would anyone give a personal guantee in this market where there is LOTS of empty space?
Because LL’s are coughing up huge amounts of money in tenant improvements, free rent and commissions.
Even in a soft market like this LL’s are going to ask to secure their leases and if it’s a new entity the LL is not going to throw good money after bad.
In most cases, the tenent pays for improvements. In SF, there is likely to be lots of office space that would need few improvements, and certainly nothing major.
I’m sorry but your assertion is dead wrong. In office buildings the LL pays. In soft or hard markets they pay. The amount they give can vary somewhat in those markets but in most cases what the LL gives ends up turnkey.
Secondly, almost all space needs retrofitting if it’s 2nd generation. I’m sure there’s a good amount of shell space in SF.
Third, you are most likely referring to retail space where the tenant pays which is a totally differnt animal than office.
Does that mean 550000/.65=846,000 sf for $281,000 or $332/SF?
Does that mean 550000/.65=846,000 sf for $281,000 or $332/SF?
Well, here in Carolina we just learned that the Dupont polyester film plant which is one of the oldest industries in Florence county will be completely shut down by Sept. of 2010 and will be demolished down to ground level after closing. This was one of the few places where a person could make a good living and secure a good retirement. There will probably never be a new industry that offers anything close to what Dupont used to offer. The only prospects for a future here for young people seem to be in the medical field and if Obama has his way that probably won’t be very rosy soon. A Heinz ketchup plant that was announced has been put on hold for now and a huge QVC distribution warehouse that has only been operating for three years or so is looking almost abandoned, when I drive by it I see maybe one trailer at a line of docks that stretch as far as I can see from the road. I know one young man who has been working there and he might as well be laid off for all the hours he gets lately.
I see no reason to believe that those who talk of an upturn soon are anything other than dreamers or con artists.
No...
the buyer paid $510 per SF for the building and it’s 65% vacant.
They’re probably losing $55/SF yr in debt service and operating costs on the vacant SF
I agree rip...there is no light at the end of the tunnel UNTIL we see a pro-capitalist/pro business/pro tax payer government seated.
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