Kennedy Wilson Faces Default on Bay Area Office Campus

The debt backing an office complex in Marin County is facing imminent default as the property owner works to sell the property.

The loan, tied to Hamilton Landing in Novato, was transferred to special servicing this month due to the borrower’s inability to pay off the loan at maturity, the San Francisco Business Times reported. Property owner Kennedy Wilson had paid off the interest on the $60 million loan on the property but did not amortize entirely.

Spanning 411,100 square feet across seven buildings, the office campus saw an exodus of tenants in recent years. Occupancy rates fell from 85 percent in 2021 to 55 percent as of this May. It lost one of its largest tenants, Visual Concepts Entertainment, when its lease for 64,200 square feet expired in July. The increased vacancy ostensibly made it harder to refinance the loan, the outlet said.

Kennedy Wilson listed the property for sale earlier this year, though it hasn’t found a buyer yet. The Beverly Hills-based investment firm bought the 20-acre campus in 2019 for $115 million, including the $60 million loan.

Since 2020, more than $4.1 million has been invested into the property on upgrades to the building and its amenities. This included the construction of “The Landing,” an outdoor tenant amenity space.

Hamilton Landing was built in 1933 and was a former military base before being decommissioned in the 1970s. It holds an interesting spot in World War II history as planes from the base happened to arrive in Pearl Harbor the morning of Dec. 7, 1941.

The group of airplane hangars was converted into office space in 2000 by Barker Pacific Group and Prudential Real Estate Investors. The companies sank $100 million into the redevelopment.

Current tenants at Hamilton Landing include video game company Take Two Interactive Software, the Marin Community Foundation, footwear brand Vionic and analytics company Fair Isaac Corporation.

— Chris Malone Méndez