Callahan Capital Buys 101 Mission Street Building

Callahan Capital Partners is the new owner of the 101 Mission Street building in San Francisco’s Financial District.

The Chicago-based real estate private equity firm teamed up with local real estate firm Probis Strategic Solutions to purchase the 22-story office tower for about $82 million, the San Francisco Standard reported. New York-based Vanbarton Group bought 101 Mission in 2018 for $163 million before defaulting on a $93 million mortgage. Vanbarton spent more than $30 million renovating common areas and tenant spaces.

The deal for the 1985-built building is a deed in lieu of foreclosure, meaning the property was sold by lenders who foreclosed on the debt tied to the building. Last July, activist investor Elliott Investment Management acquired the $93 million debt for an undisclosed amount before marketing the property for sale.

The building spans 213,000 square feet and is more than 50 percent occupied. Tenants include real estate firm Rubicon Point Partners and beverage producer Constellation Brands.

Callahan Capital’s purchase marks the company’s first office buy in San Francisco. The firm plans to renovate the building and “move forward quickly with a thoughtful repositioning strategy,” CEO Tim Callahan said in a statement.

Probis got involved in the purchase because it saw the San Francisco office market showing “meaningful signs of recovery” as artificial intelligence firms moved into town and snapped up more office space, David Dowdney, managing partner of Probis, said. The company “believe[s] high-quality, well-located office buildings in San Francisco are entering a new phase of opportunity, and 101 Mission is exceptionally well-positioned to benefit from that recovery.”

Last spring, Brookfield Properties was in talks to buy the debt linked to 101 Mission Street, as an affiliate of the New York-based company originated a mezzanine loan for Vanbarton’s 2018 purchase of the building. But Brookfield and loan seller ING Group couldn’t come to an agreement with lender partners about how to move forward, and the deal ultimately fell through.

— Chris Malone Méndez