A South Financial District office building is heading to foreclosure after its Marin County-based landlord defaulted on a $21 million loan on the property last year, according to court filings.
Jonathan Parker, a principal of Monahan Parker, told The Real Deal he still hopes to hang on to the six-story, nearly 70,000-square-foot building.
Parker said he has presented the servicer — Beacon Default Management, formerly known as Rialto Capital — with “multiple offers from third-party buyers at or above the loan amount, as well as loan extension proposals wherein we would maintain ownership.”
But those efforts have all been rejected by the lender, U.S. Bank National Association, due to additional interest and default fees that the CMBS bondholders have been unwilling to renegotiate, he said.
The total amount owed, including interest and fees, is $24.7 million, according to a foreclosure notice filed on Feb. 25. The owners have 90 days from the filing before a foreclosure sale can take place.
Efforts to “resolve the purchase or refinancing of the property are ongoing,” Parker said.
Beacon referred comment to legal counsel for the lender, which said in a statement that it is “committed to engaging with borrowers to find the best possible resolutions. At the same time, we expect these sophisticated commercial borrowers to honor the commitments they have made.”
Marin-based Monahan Parker is a partnership between Parker, who is also a filmmaker, and Tom Monahan, president of Monahan Pacific, which owns office, residential and mixed-use properties, primarily in San Francisco and Marin.
Parker, through his land-use attorney, said that he was the minority owner in the building, and that it represented “one of hundreds of buildings in San Francisco that is a victim of the work-from-home trend.” The city only recently got out of last place for return-to-office figures, according to cell phone data analyzed by Placer.ai.
Monahan Parker bought the 1907 building, which was expanded in 1925, for $11 million in 1998. Built in the aftermath of the 1906 quake, it had been vacant since it was damaged by the Loma Prieta earthquake in 1989. After a major seismic retrofit and new interior finishes that wrapped up in 2000, the owners took out a $21 million interest-only loan with Natixis Real Estate Capital, a subsidiary of French bank Groupe BPCE, in 2013, according to loan documents. That loan was then packaged with others into a commercial mortgage-backed security pool in 2014. At the time, the property was 100 percent occupied and worth $34 million, or about $400 per square foot.
But by March last year, the value had dropped to $20.7 million, according to Morningstar analysis. The most recent appraisal from the end of August shows an even lower value of $16.3 million. Interestingly, as of Sept. 30, 2024, the property was 92 percent occupied, according to Morningstar, after holding steady at 71 percent from the end of 2022 to the end of 2023.
A Cushman & Wakefield marketing site for the property shows two available suites: the entire 11,200-square-foot second floor, which is asking for $60 to $64 per square foot annually, and half of the ground floor, which does not have an asking rent listed. If those listings are up to date, that would put the property at about 78 percent occupancy.
Average asking rents in the South Financial District were $78.54 in the fourth quarter of 2024, according to Colliers data, and the neighborhood was showing an availability rate of 32.1 percent. That’s a slightly lower availability rate than the city’s 35.5 percent overall rate, and a slightly higher asking rent than the overall average of just under $70.
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