Tidewater Capital surrenders Oakland office building after default

Tidewater Capital has surrendered a historic office building in Downtown Oakland to its lender after defaulting on more than $25.5 million in debt.

The San Francisco-based investor gave up the 10-story office building at 1440 Broadway, the San Francisco Business Times reported. 

The lender, New York-based BrightSpire Capital, takes control of the 83,000-square-foot property during an office market downturn within a larger shift to remote work. 

Tidewater and Paris-based Axa bought the office building in 2018 for $43.5 million, then refinanced it in 2021 with a floating-rate loan from BrightSpire. 

It’s not clear if Axa still co-owned the property when Tidewater handed BrightSpire the keys. It’s also not clear why Tidewater surrendered it three years before the loans were due.

Tidewater’s loan for the property was set to mature at the end of 2026, according to regulatory documents filed by BrightSpire earlier this year. 

BrightSpire had been interviewing brokerage firms to help market 1440 Broadway to new tenants in the weeks leading up to the seizure, three unidentified sources told the Business Times.

That may suggest the firm may keep the building instead of immediately putting it up for sale. 

The value of the building, now 60 percent leased, has risen 250 percent in three years, with several trades leading up to the pandemic. The restored brick building, built in 1911 by industrial tycoon F.M. “Borax” Smith, includes Carrera marble interiors, high ceilings, large windows that open and historic light fixtures and oak finishes, according to Orton Development.

Miami-based Market Street Real Estate Partners bought the building in 2015 for $15.75 million. It then sold it to San Francisco-based Advisors for $25.35 million, which sold it to Tidewater and Axa with a 70 percent mark-up.

Office investors flocked to Oakland more than a decade ago, drawn by its low vacancies. In 2018, the East Bay city had the hottest market in the nation, according to CBRE.

The city’s central core business district, including Downtown, Uptown and Lake Merritt, now has record office vacancies, which hit 35.7 percent in June. Office landlords in Oakland have also started to slash rents, after holding steady through the pandemic.

In February, Tidewater proposed two take-your-pick projects near the Oakland waterfront. It has also acquired a 526,000-square-foot office complex in East Oakland that caters to government tenants and has filed plans to build 300 apartments near the West Oakland BART station.

— Dana Bartholomew

Read more

San Francisco

Office vacancy in Greater Downtown Oakland climbs to 36%

San Francisco

Can Oakland make a comeback?

San Francisco

Tidewater pitches either/or plans for Oakland waterfront