Debt Deal for Juul’s Former HQ Could Transfer Ownership

A lender is close to selling the debt backed by Juul Labs’ San Francisco office tower, potentially setting the stage for a change in ownership more than six years after the e-cigarette company first considered offloading the property.

Affinius, the lender, is in discussions to sell the debt on 123 Mission Street to Madison Capital, though no deal has been finalized, according to the San Francisco Business Times. If the debt is non-performing or becomes so, Madison Capital could acquire the building through foreclosure or a negotiated transfer.

Juul purchased the 29-story, 387,000-square-foot office building in June 2019 for $397 million to accommodate its growing workforce. However, regulatory scrutiny over its vaping products led to a sharp decline in valuation and staff reductions.

By May 2020, Juul announced its headquarters move to Washington, D.C., and listed the San Francisco building for sale. Multiple sale attempts, including deals with PGIM and Pimco, collapsed in 2020. Madison Capital, which previously partnered with PGIM on a bid, may now engineer a second attempt to acquire the property, likely at a discount price from the pre-pandemic valuation of $1,100 per square foot, or a total of $400 million.

Affinius, formerly Square Mile Capital, originated a $220 million loan for Juul’s acquisition of 123 Mission Street and has since reduced its San Francisco holdings. It recently sold One Montgomery to Empire and partnered with Fortress Investment Group to acquire debt on 600 Battery Street.

Juul’s leasing efforts for 123 Mission also faltered.

In 2021, Align Real Estate and Newmark marketed 266,000 square feet for lease, but no deal materialized. Juul reportedly still leases about 62,500 square feet, though current occupancy details remain unclear. The outcome of the debt sale could determine the future of the high-profile downtown asset amid ongoing market uncertainty.

— Joel Russell