Sale of San Francisco Centre Mall Dead in the Water

Prado Group and Presidio Bay Ventures won’t be taking ownership of the San Francisco Centre mall after all.

On Wednesday, Prado and Presidio Bay confirmed their exit from a deal to acquire the beleaguered retail complex at 865 Market Street, the San Francisco Chronicle reported. Details surrounding Prado and Presidio Bay’s deal, including how much the firms had committed to spending for the mall, have not been disclosed.

“After extensive diligence and thoughtful evaluation, we are not currently moving forward with the transaction,” the firms said, noting the 1.5-million-square-foot mall’s “pivotal importance to Market Street and the broader San Francisco downtown recovery that is underway.”

The reasons behind the deal’s collapse remain unclear, though one source cited by the Chronicle said the transaction was canceled, in part, after the buyers were unable to renegotiate an existing long-term lease held by the San Francisco Unified School District for a portion of the property. SFUSD owns a roughly 76,000-square-foot piece of land beneath the mall where a Nordstrom store once operated. The school district leased out the parcel for commercial development in the 1980s in a contract that runs through 2043.

Prado and Presidio Bay might have walked away because of possible financial exposure, according to another source. The Chronicle cited another person familiar with the matter who said the buyers could have been unable to secure the necessary funding for the “high-risk” investment.

“We are grateful to the sellers, CBRE and Eastdil, the City, SFUSD, our consultants, partners and the many stakeholders who engaged constructively throughout our purchase evaluation process,” Prado and Presidio Bay said in a joint statement of the abandoned deal. “We are not at liberty to comment any further at this time.”

Lenders Goldman Sachs and JPMorgan Chase seized ownership of San Francisco Centre last November through a $134 million credit bid in a foreclosure auction. Former owners Unibail-Rodamco-Westfield and Brookfield Properties stopped making payments on the mall’s $558 million loan in June 2023, claiming the Covid pandemic killed the mall’s financial viability.

The foreclosure capped off years of rapidly declining occupancy and foot traffic at the complex as retailers either decamped for other parts of town or, in the case of anchor tenant Bloomingdale’s, left San Francisco entirely. The last of the remaining tenants exited the property in January and the mall was shuttered the following month.

The mall is expected to head back to market. CBRE, which was hired last year to sell the mall and was retained after Goldman Sachs and JPMorgan Chase’s foreclosure purchase, did not comment on the matter.

— Chris Malone Méndez