ING’s Brookfield Deal in San Francisco Fails

ING could be looking for a new buyer for a downtown San Francisco office tower after its deal with Brookfield fell through.

Brookfield committed to purchase 101 Mission Street earlier this year by taking over ING’s non-performing $93.2 million loan to Vanbarton Group, the San Francisco Business Times reported. Had the deal gone through, it would have placed the 22-story building’s value at nearly $80 million, or about $380 per square foot.

Vanbarton bought the 213,700-square-foot building in 2018 for $163.3 million — more than double the price per square foot the Brookfield deal would’ve offered. It won’t be retaining any stake in the building once it sells.

Brookfield and ING, a senior lender for the tower, couldn’t reach a consensus with other lenders with stakes in the property about the best way to proceed, the Business Times reported.

ING appears to have been anticipating the deal would collapse. In recent weeks, the Amsterdam-based financial institution has purportedly been in talks with other prospective buyers about assuming the $93.2 million loan. One unnamed source told the Business Times that ING is currently negotiating a deal to sell the loan to a new buyer, though details have not been disclosed.

ING is also the lender for Market Center, a two-tower complex at 555-575 Market Street a few blocks southwest of 101 Mission. On May 30, the Dutch lender closed a deal with billionaire real estate and restaurant magnate Greg Flynn and his Flynn Properties company to take over the building via approximately $177 million in debt on a non-performing loan.

The 101 Mission building reported a roughly 80 percent occupancy earlier this year, the Business Times reported. The building is still generating cash flow.

Though San Francisco still maintains a high office vacancy rate at 36.6 percent, CBRE predicts that could drop dramatically in the coming years with an influx of AI companies and employees. Some office building owners, such as Flynn at 555-575 Market and LaSalle Investment Management at 201 Mission Street, are bullish on Mayor Daniel Lurie’s new plan to allow downtown office buildings to transform their ground-floor retail spaces into office amenities like gyms.

— Chris Malone Méndez