Heitman Capital Management has seized a 535,000-square-foot building that serves as a hub for Clorox in downtown Oakland after foreclosing on a $239.6 million loan.
The Chicago-based real estate management firm took control of the 24-story building at 1221 Broadway but retained a former co-owner as its operating partner, the San Francisco Business Times reported.
Private equity firm KKR and TMG Partners bought the building in 2019 for $255.34 million, or $477 per square foot, and it was among the largest commercial real estate deals in Oakland.
New York-based KKR borrowed $239.6 million from Heitman for the purchase and later defaulted on the loan. It’s not clear what role TMG, listed as a co-owner, played in the default.
TMG, based in San Francisco, will stay on as manager of the office tower, with plans to renovate the property to draw new tenants.
The glass-covered trophy tower, designed by Cesar Pelli in 1976, includes ground-floor shops and restaurants at City Center.
Clorox, the building’s anchor tenant, leases half of the building in a lease that expires next year. It’s not clear if Clorox renewed that lease, and if so, how much space it kept.
The company put four floors of its headquarters up for sublease in 2022, and in 2021 gave part of its corporate offices to FiveTran in a direct lease with the landlord.
Other anchor tenants include Union Bank, Brown and Toland and WCIRB.
TMG’s renovation plans include upgrades to the main building systems, as well as strategic re-leasing, according to its website.
Clorox leased its headquarters in 2012, after selling the building to San Diego-based Westcore Properties for $110 million. The building was sold to Swiss-based UBS in 2015 for $165 million, then to KKR and TMG.
Since the pandemic, building vacancies rose and property values plummeted in Oakland, leaving landlords unable to pay off debts. The Clorox building foreclosure comes after a slew of Oakland office properties were either handed to their lenders or sold at firesale prices.
Last month, the 206,000-square-foot Edgewater Park Plaza office park at 7700 Edgewater Drive went into foreclosure after the previous owner, a former HP Investors affiliate, defaulted on a $21.4 million loan.
In January, Deutsche Bank seized three office buildings from Starwood Capital at 2100 Franklin Street, 2101 Webster Street and 1901 Harrison Street through a deed in lieu of foreclosure. The bank then tapped Harvest Properties as an operating partner.
—Dana Bartholomew
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