Presidio Bay Buying Mack Real Estate Office Debt

A San Francisco investor is taking over the debt associated with a historic downtown office building.

Presidio Bay Ventures is in talks to acquire the nonperforming $100 million loan tied to 301 Battery Street, the San Francisco Business Times reported. The deal would position the local firm to take control of the 208,000-square-foot Beaux-Arts property from current owner RFR Holdings through foreclosure or a deed-in-lieu process.

Mack Real Estate, which originated the loan when RFR bought the property for $143 million in 2020, is selling the debt. The loan’s final sale price has not been disclosed, though it’s expected to sell in the mid-$300-per-square-foot range, implying a valuation of around $70 million, or roughly half of RFR’s purchase price. The sale has not yet closed, per the Business Times. Mack began seeking a buyer for the debt earlier this spring.

The 301 Battery property is the former Federal Reserve Bank of San Francisco building. Presidio Bay is reportedly working alongside hospitality operator Phil Spiegel on a concept for the property; the building’s 28,000-square-foot banking hall is already being marketed by CBRE as a potential venue and events hub.

Under RFR’s ownership, the firm floated its own amenity-heavy ideas for 301 Battery, including a proposed pickleball court, though those plans never came to fruition. RFR is known for repositioning trophy properties like the Seagram Building and Chrysler Building ground lease, though it has faced pressure across parts of its portfolio since the pandemic-era office downturn.

RFR purportedly is unlikely to cooperate with a debt buyer on the property once the sale closes, according to sources cited by the Business Times. As a result, Presidio Bay could face a longer process pursuing a formal foreclosure instead of working directly with RFR before it can secure the title.

The potential acquisition would extend Presidio Bay’s growing footprint in post-pandemic downtown San Francisco. The firm bought 60 Spear Street in 2023 and is in the midst of a $100 million repositioning of the property into the country’s first so-called office resort, complete with restaurants, event programming and hospitality-style services. — Chris Malone Méndez