Lenders Sue Kylli to Take Back Bush Street Offices

Kylli is in danger of losing a 22-story office tower in San Francisco’s Financial District.

Lenders for the building at 225 Bush Street have filed a lawsuit against the Burlingame-based company to place the office tower into receivership, the San Francisco Business Times reported.

Kylli, the U.S. branch of Chinese investor Genzon, defaulted on a $350 million loan backed by the property last November. Its future hung in the balance as lenders mulled their next move. In March, lender Deutsche Bank looked to sell the distressed building.

The building’s lenders are looking to pursue judicial foreclosure, according to the Business Times. In doing so, they would be able to recoup all of the $350 million in debt backed by 225 Bush. Kylli has owned a majority stake in the building since 2014.

It’s not the only option they’re open to, however. The lawsuit mentions the possibility of lenders pursuing a nonjudicial foreclosure where they would receive only what the building might sell for at a future sale to repay the $350 million loan.

The lenders have asked the court to appoint Douglas Wilson Companies as 225 Bush’s receiver. The San Diego-based firm was appointed earlier this year as receiver for Parkmerced, the largest apartment complex in San Francisco.

How much the 225 Bush building, constructed for Standard Oil in the early 20th century, would fetch in a purchase remains to be seen. Its appraised value fell to $153 million in December 2024, a nearly 75 percent drop from the $589 million it was appraised at in 2019, according to CMBS data cited by the Business Times.

Occupancy at the office tower fell to 43 percent at the end of last year, as did revenues, tumbling from $40.3 million when the building was fully occupied in 2019 to $21.3 million last year, according to the Business Times. If it goes up for sale, the 580,000-square-foot building would be one of the largest office properties to hit the market in San Francisco post-pandemic.

— Chris Malone Méndez