CIM Seeks Foreclosure Agreement for SoMa Offices

CIM Group is preparing to surrender two adjacent office buildings along the Market Street corridor to lenders.

The Los Angeles-based investor is in discussions with its lenders regarding a consensual foreclosure of the Central Tower complex, which consists of buildings at 703 Market Street and 26 Third Street, the San Francisco Business Times reported, citing notes sent to the bondholders of a $98 million commercial mortgage-backed securities loan tied to the property.

CIM’s lenders expect to take ownership of the buildings, which span a combined 165,000 square feet, by the fourth quarter, the outlet said. The loan is in special servicing handled by Rialto Capital.

The buildings were once occupied by video game software development company Unity Software, which at one point leased nearly 86,000 square feet for its headquarters. By late 2024, it cut down its presence there to 53,000 square feet ahead of its August 2025 lease expiration and ultimately moved its headquarters to a smaller space at 116 New Montgomery Street.

CIM defaulted on the $98 million loan early this year after informing lenders it would not be able to continue making its monthly payments on the debt without forbearance or modification to the loan after Unity’s lease expired. If CIM’s lenders opt to foreclose on the buildings, they could choose to sell the property to recoup a portion of the debt.

CIM acquired the 21-story 703 Market Street and the five-story 26 Third Street in late 2013 for roughly $50 million. The firm spent $45.7 million renovating the buildings. Under CIM’s ownership, occupancy at Central Tower increased from 87 percent when it acquired it to 98.5 percent in early 2019, when CIM refinanced.

This would be the second office holding that CIM stands to lose to foreclosure after a major technology tenant’s exit.

Lenders sued CIM last year over allegedly failing to make monthly payments on a loan backed by 55 Hawthorne Street, a 136,400-square-foot office building that CIM acquired when it was leased entirely to Yelp. But the tech firm allowed its lease to expire last summer.

— Chris Malone Méndez