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San Francisco

Union Square retail property could go up for sale

Owner Thor Equities has Banana Republic as future tenant, but can’t refi $11.5M loan

Thor Equities' Joseph Sitt and 152 Geary Street (Thor Equities, Getty)
Thor Equities' Joseph Sitt and 152 Geary Street (Thor Equities, Getty)

A building in the heart of Union Square could hit the market as it deals with a debt issue.

Property owner Thor Equities Group has attempted to refinance or sell the three-story building, but claims it can’t until it secures a new retail tenant at 152 Geary Street, as first reported by the San Francisco Business Times.

Thor Equities is seeking to refinance a non-performing $11.5 million commercial mortgage-backed securities loan on the property.

The 11,000-square-foot building hasn’t been open to the public since 2018 but will soon welcome a Banana Republic flagship after parent brand Gap signed a 10-year lease for the entire building last year.

Banana Republic was expected to take occupancy this month, which would make it easier to sell or refinance the property. In another sign that a sale could be imminent, last week a  zoning verification request was made to city planners, which is typically part of the due diligence process when a property owner contemplates a sale.

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The lender, Morgan Stanley, plans to “dual track legal remedies” while continuing discussions with Thor Equities on possible forbearance, which Thor Equities has asked for, according to the report.

The Union Square retail building property was valued at $21 million in an appraisal in November, down slightly from a $21.4 million valuation at the time of the loan in 2012. During that time the building was fully occupied by tenants that included men’s fashion designer John Varvatos and luxury consignment boutique Fashionphile.

Thor Equities’ $11.5 million CMBS loan has been non-performing since mid-2020 and has been on an industry watchlist for potential default since then. The building was subjected to a default notice in 2021, in which Fidelity National Title threatened to seize and sell the property at foreclosure if the owed payments weren’t made to Morgan Stanley. 

— Pawan Naidu

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CMBS Loan