Hines wins four-month extension for $80M in loans tied to SF’s Transbay site

Hines received a mulligan on $80 million in loans tied to a 61-story luxury condo, hotel and office tower yet to break ground in Downtown San Francisco.

The Houston-based developer won an extension through October for two loans for its Transbay Parcel F property at 442-550 Howard Street set to mature last month, the San Francisco Business Times reported, citing public records.

The pass gives Hines four months to cut a deal with New York-based JPMorgan Chase and United Overseas Bank Limited, based in Singapore, which in 2016 each issued notes for $40 million. 

Hines paid $120,000 for the extension.

F4 Transbay Partners — a joint venture including Hines, New York-based Goldman Sachs and Urban Pacific Development, based in San Francisco  — were approved in 2021 to build the 1.1-million-square-foot tower. 

Plans for Transbay Parcel F include 165 condos, 189 hotel rooms, 275,600 square feet of offices, 20,000 square feet of outdoor parks and 9,000 square feet of shops and restaurants between First, Second, Howard and Natoma Streets, next to the Salesforce Transit Center.

But the 800-foot, silver-blue skyscraper hit headwinds during the pandemic and a plunge in office demand in the era of remote work.

In early 2021, the developers asked to pay a $45 million fee rather than include 33 affordable for-sale condominiums, saying they wouldn’t financially pencil out. The city heeded the request. 

Then Salesforce, among the city’s largest employers, backed out of plans to lease 15 stories of offices in what would be San Francisco’s fourth tallest building.

In April 2022, F4 Transbay negotiated a deal with the Transbay Joint Powers Authority to pay $40 million in damages for its delay in building the mixed-use tower, which was supposed to have been completed this year.

Next year, F4 Transbay must start paying the $40 million in four installments to the Transbay authority by July 2027. The joint venture bought the property from the Authority in 2016 for $160 million.

A Transbay authority spokesperson told the Business Times that the deal to reduce the penalty charge still hinges upon Hines providing a letter of credit, adding that the developer has not provided a new timeline for the project. The consortium had expected to break ground last year and complete the tower by 2027.

Hines, among San Francisco’s most prolific developers, in 2021 bought the 1.6 million-square-foot former PG&E headquarters complex 77 Beale Street for $800 million. But plans to build a 992-foot, 808-unit residential tower have also stalled.

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— Dana Bartholomew