Loan Linked to San Francisco’s Bush Street Tower to Sell

After a year of plummeting value and questions about 225 Bush Street’s fate, the downtown San Francisco office tower appears poised to emerge from its pit of distress.

Lenders have begun the process of selling a $350 million nonperforming loan tied to 225 Bush Street, the San Francisco Business Times reported. The special servicer overseeing the note is reportedly in discussions with JLL about putting the loan on the market, multiple people with knowledge of the matter told the Business Times. A formal listing has yet to emerge.

Building owner Kylli defaulted on the note in November 2024, and the 22-story tower’s lenders have floated various options to settle the nonperforming debt, including working out a deal with Kylli, listing the debt for sale and pursuing foreclosure at the site. By putting the debt up for sale, a buyer could either move to foreclose on 225 Bush or arrange a deal with Kylli to take ownership of the 580,972-square-foot building.

Kylli, a subsidiary of Chinese investor Genzon Investment Group, acquired a majority stake in 225 Bush Street, once the headquarters of Standard Oil Corporation, in 2014. At the time, the building’s value was placed at $350 million. In 2019, Kylli bought a minority stake from San Francisco-based Flynn Properties and refinanced the building with the $350 million loan. The building’s appraised value that year was $589 million.

In December 2024, after the owner stopped making payments on the loan, the building’s appraised value dropped to $153 million, or approximately $263 per square foot. Last August, lenders sued to have the building placed into receivership, putting management operations in the hands of a third party rather than Kylli. Douglas Wilson of Douglas Wilson Companies was appointed as receiver that month, and the firm has been working with JLL on leasing at the building since then, according to San Francisco Superior Court documents cited by the Business Times.

The property at 225 Bush is hardly the first San Francisco office building to fall into loan default after the pandemic. Last month, Columbia Property Trust received a notice of default after missing payments on a $1.7 billion commercial mortgage-backed securities loan backed by 650 California Street and 201 California Street, both in San Francisco’s Financial District, and five other office buildings across the country. In October, lenders filed a lawsuit to initiate foreclosure proceedings at 55 Hawthorne Street after CIM Group defaulted on a $61.5 million loan backed by the property.

— Chris Malone Méndez