Trump Group, Vornado Realty Request Mortgage Extension for Downtown SF Skyscraper

The previous Financial institution of America headquarters constructing at 555 California in San Francisco’s Monetary District, co-owned by the Trump Group and Vornado Realty Belief, has been within the information just lately after heavy winds that accompanied main storms despatched home windows crashing to the bottom. 

However now, the property’s house owners are coping with a distinct sort of storm. 

In response to a report from The Actual Deal, the house owners have requested an extension on their mortgage on the constructing a few month after the property was positioned on a particular servicing watchlist, indicating that mortgage holders are preserving an in depth eye on the workplace advanced.

Vornado owns 70% of the 1.35 million sq. foot advanced, which incorporates two adjoining properties, whereas the Trump Group owns the rest.

Whereas the mortgage extension request isn’t itself uncommon, it’s going down in a troublesome macroeconomic atmosphere exemplified by rising rates of interest and financing points attributable to decrease demand for workplace leases.  

Nowhere is that this extra obvious than San Francisco, the place workplace vacancies just lately rose to 29.5%, in keeping with preliminary information from CBRE.

The Actual Deal reported the house owners are on time with the $1.2 billion mortgage debt secured by the 55-story constructing, however that month-to-month debt funds have elevated by 38% for the reason that mortgage was made in 2021 owing to rising web charges.  

Manus Clancy, senior managing director at business actual property information firm Trepp, stated in an interview final month that primarily based on Trepp’s information, the $1.2 billion mortgage for the workplace advanced was initially made in 2021 with a maturity date set in 2023. The mortgage holders have a sequence of 5 12-month extension choices, which pushes out their maturity date to 2028.

Clancey stated that in 2021, the house owners seemingly bought an rate of interest cap, which is basically an insurance coverage measure that guards the property proprietor from sharp rate of interest hikes. However that solely lasted for the primary two years of the mortgage, Clancy stated.

The query is whether or not the house owners will be capable of get an extension on that rate of interest cap or must buy one other one at the next worth. 

The 52-story 555 California is among the metropolis’s premier workplace buildings and the fourth largest constructing within the metropolis. And whereas the constructing is sort of totally leased, most of the leases are set to run out within the subsequent few years. 

Kevin Truong could be reached at [email protected]