KKR Lands Refinancing for OpenAI-Leased Mission Bay Office

KKR secured a sizable refinancing package for a multi-building complex that was recently leased by artificial intelligence giant OpenAI.

The New York-based investment firm completed a $600 million refinancing for a four-building property at 1800 Owens Street in Mission Bay, the San Francisco Business Times reported. The $600 million debt replaces an existing loan of the same amount.

KKR acquired the 750,000-square-foot property in 2021 for over $1 billion, about $1,440 per square foot. The complex has long been synonymous with Dropbox, which leased the entire campus in 2017 in one of the city’s largest office deals. But the cloud storage company has been gradually vacating its space there, subleasing to tenants including Sam Altman-led OpenAI. Last month, Dropbox subleased 282,000 square feet to OpenAI, comprising a chunk of the AI behemoth’s 1-million-square-foot total footprint in Mission Bay.

The new financing was originated by Barclays, Wells Fargo and Goldman Sachs, though specific terms of the loan were not disclosed. The original debt package, which helped finance the acquisition of the complex, included multiple extension options stretching to 2033. Notes sent to commercial mortgage-backed securities bondholders in the spring of 2023 signaled that lenders expected KKR to pay off the debt in April 2026.

The refinancing lands in a different market environment than five years ago. Interest rates have climbed significantly since 2021, suggesting KKR may now be paying more to own the buildings than it did before.

KKR’s bet hinges on stabilizing tenancy after Dropbox’s departure. Dropbox has already trimmed its footprint and struck direct deals with other occupants in the complex, helping backfill space. Dropbox, meanwhile, has lined up a new headquarters at 50 Hawthorne Street, though it has yet to publicly detail its move-out timeline. Its master lease at the complex runs through 2033.

— Chris Malone Méndez