Hines to sell 61-story condo, hotel and office tower project in SF 

Joint venture cited "dislocated market conditions” and a loan deadline for $80M

Hines' Jeffrey C. Hines; 442-550 Howard Street; Urban Pacific Development's Michael Kriozere (Getty, Urban Pacific Development, Hines, Steelblue)
Hines' Jeffrey C. Hines; 442-550 Howard Street; Urban Pacific Development's Michael Kriozere (Getty, Urban Pacific Development, Hines, Steelblue)

A joint venture led by Hines has listed a 61-story luxury condo, hotel and office tower project in San Francisco ahead of $80 million in loans due this fall.

F4 Transbay Partners which includes the Houston-based developer, New York-based Goldman Sachs and Urban Pacific Development, based in San Francisco wants to sell the Transbay Parcel F property at 442-550 Howard Street, the San Francisco Business Times reported.

An asking price for the 800-foot-tall project was not disclosed.

The approved Transbay development, seven years in the making, won an extension last month for two loans set to mature in October.

The clock was ticking to pay back New York-based JPMorgan Chase and United Overseas Bank Limited, based in Singapore, which in 2016 each issued notes for $40 million. 

Hines said it was selling the project because of the pending loan maturity, coupled with “dislocated market conditions and an over seven-year history of significant investment into the project.”

The joint venture will “seek new investment to recapitalize and protect the best interests of our investors and stakeholders,” Hines said in a statement, adding it was open to staying involved with the project.

F4 Transbay said it intends to finalize a deal by December.

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.

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But the skyscraper faced headwinds during the pandemic, especially as office demand plunged.

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 within what would be San Francisco’s fourth tallest building.

In April of last year, 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.

The first part of that fee, $10 million, is owed to the Authority next year, and that the buyer “would assume these obligations,” a Hines representative told the Business Times

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.

— Dana Bartholomew

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