Paramount, Blackstone Face Looming Loan Deadline

A loan tied to the One Market Plaza offices in San Francisco could spell trouble for its owners as its maturity date approaches.

The $850 million loan backed by the 1.6 million-square-foot office complex is set to mature in February of next year, and has meanwhile been placed on a lender watch list, the San Francisco Business Times reported.

The buildings’ owners, Paramount Group and Blackstone, haven’t declared what they plan to do regarding the maturity. There’s still a few more months for the entities to discuss their plans with lenders, and it isn’t the first time they’ve faced a looming maturity date. They previously paid down a loan backed by the complex from $975 million to $850 million in order to secure an extension of the loan’s maturity from February 2024 to February 2026; that deal also includes a one-year extension option.

The extension also included a year-long forbearance, meaning the loan’s maturity could effectively be pushed to February 2028.

As of June, One Market Plaza was 67 percent occupied, down from 90 percent at the end of last year. Traditionally, borrowers have trouble refinancing office buildings with an occupancy rate of less than 70 percent, according to Morningstar data cited by the Business Times.

Occupancy at One Market Plaza is expected to plummet even further as more companies move out.

Google contributed to the fall earlier this year by not renewing its lease for 342,000 square feet this spring. Law firm Morgan Lewis & Bockius is moving to the Transamerica Pyramid and will let its 150,000-square-foot-lease expire early next year. Visa moved into its new offices at Mission Rock last year, though it still has a 160,000-square-foot lease at One Market Plaza expiring next September. It remains unclear if Autodesk, which has a 109,000-square-foot lease in the building expiring next June, will remain at the complex.

With the departures of Morgan Lewis & Bockius and Visa, Paramount and Blackstone could face an occupancy rate of less than 50 percent. In order to attract tenants — and in turn, likely improve its chances of securing a possible refinancing deal — Paramount announced earlier this year that it plans to ramp up its amenities programming at One Market.

The buildings aren’t emptying out completely, however. New tenants such as law firm Simpson Thacher and Postman have planted flags at the complex, with Simpson Thatcher taking 32,000 square feet of Google’s former space and Postman grabbing 32,000 square feet of Visa’s former offices.

— Chris Malone Méndez