Jamestown cuts deal with lender to keep historic SF office building

Last fall, Jamestown defaulted on $93.1 million in mortgages tied to two historic office buildings in Downtown San Francisco. Now the company has cut a deal to keep one and lose the other.

The Atlanta-based investment firm will retain ownership of the 135,500-square-foot Rialto Building at 116 New Montgomery Street, the San Francisco Business Times reported. 

In 2015, Jamestown bought the Rialto and a 93,000-square-foot building at 731 Market Street. It paid $111.1 million, or $820 per square foot, for the now 122-year-old building on New Montgomery. And it paid $65.5 million, or $700 per square foot, for the now 116-year-old building on Market. 

Last fall, lender Capital One served a notice of default for a $60.6 million loan tied to the building on New Montgomery. It then sued Jamestown to foreclose on a $32.5 million delinquent loan linked to the building on Market Street.

Early this year, locally based TMG Partners was in talks to buy the building at 731 Market Street for between $160 and $180 per square foot, according to the Business Times. But the deal is held up by complications from owner Jamestown’s delinquent loan on the property.

Now Jamestown appears to have dodged a loss at 116 New Montgomery by cutting a deal with Capital One.

Its outstanding loan balance has been “satisfied,” according to Jamestown spokeswoman Lisa Serbaniewicz. Jamestown will continue to own, operate and manage the building, she said in a statement.

Serbaniewicz didn’t disclose details of the agreement Jamestown struck with Capital One. But public records show a reconveyance recorded for the property in early March. The document, which suggests a borrower has repaid its lender, indicates Jamestown paid down some or all of its debt.

The New Montgomery building is home to Sigma Computing, which has expanded its footprint  from 8,000 square feet to more than 80,000 square feet across seven floors. The building’s ground-floor stores are leased to Ayola, a Mediterranean restaurant, and Working Girls’ Cafe.

Jamestown had $11.6 billion in assets under management as of the end of last year. Its San Francisco properties include Ghirardelli Square and Levi’s Plaza.

.At least one office landlord in Downtown San Francisco has partially repaid its loan in the wake of a looming debt maturity, according to the Business Times.

In December, Vanbarton Group paid $35 million toward its $65 million loan on 115 Sansome Street, effectively buying its lender out of the 125,400-square-foot office building, which the investor acquired in 2016. 

As a result of the transaction, called a discounted payoff, Vanbarton today owns 115 Sansome outright, as public records suggest Jamestown owns 116 New Montgomery, according to the newspaper.

— Dana Bartholomew

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