Landlords Give Oakland Office Building Back to Lender

Harrison Street Real Estate and Meridian handed back the keys to a medical office building once home to the Oakland Masonic Center.

An affiliate of MidCap Financial took ownership of the building, at 3901 and 3903 Broadway, via deed in lieu of foreclosure the Mercury News reported. The Maryland-based lender provided a $35.2 million loan on the 61,300-square-foot property in 2022. The debt amounted to $574 per square foot.

A joint venture between Chicago-based Harrison Street and Walnut Creek-based Meridian bought the property for $13.5 million in 2022.

Harrison Street and Meridian converted the property into medical offices, and it is now known as Broadway Medical Plaza with tenants including the Pace Center for Elders’ Independence.

The giveback is the latest instance of distress in the Bay Area office market.

Last month, court-appointed receiver Stapleton Group began preparations to sell the two-building property in Concord. Switzerland-based Partners Group defaulted on a $400 million loan backed by Concord Tech Center and three other California properties, including the Rosewood Commons business center in Pleasanton. Lender Wells Fargo pursued a judicial foreclosure earlier this year, and the receiver was appointed in May.

In June, AllianceBernstein seized ownership of a 152,300-square-foot office building at 2390 Mission College Boulevard in Santa Clara. That takeover came after real estate firm PCCP defaulted on a $72 million loan from the lender in January. Alliance Bernstein paid $21.7 million to acquire the building through foreclosure.

San Francisco is the city most prone to office foreclosures in the country. Just last month, lenders seized ownership of the 77,000-square-foot office building at 1019 Market Street, paying $10.3 million at foreclosure auction to take over the building.

— Chris Malone Méndez