Highbridge Gets Forbearance on Loan for Oakland Offices

Another trio of office buildings in Oakland is seeing a financial reprieve after briefly landing in trouble.

Highbridge Equity Partners fell more than 30 days delinquent on a $99 million loan tied to three of its properties in downtown Oakland — one of which is the historic Tribune Tower, according to servicer commentary cited by Morningstar.

However, the lender, a Rialto Capital Management fund, has granted Highbridge a forbearance, meaning they will not enforce payments, Highbridge founder Douglas Abrams said in an email. Abrams declined to share terms of the forbearance.

Highbridge is not in default on the loan and is no longer considered delinquent, according to Abrams. The loan has not been sent to special servicing and is still set to mature in 2025.

Rialto provided the loan in January 2022 to refinance $91.1 million in existing debt, according to a DBRS Morningstar report.

At the time Highbridge scored the debt from Rialto, it was paying about 5.55 percent in interest on the loan, coming out to almost $460,000 a month.

Because the loan was floating-rate, monthly payments soared once the Federal Reserve started hiking interest rates. As of last month, Highbridge was paying 8 percent, according to Morningstar, an amount that would have been higher if the firm had not bought a rate cap. At that rate, Highbridge owed about $660,000 a month in interest.

In May, co-working firm Regus signed a partnership deal to provide flexible workspaces across 17,600 square feet of space at the Tribune Tower. However, it’s not clear how much financial relief that deal has provided Highbridge.

Highbridge bought the properties between 2016 and 2019 for a total of $119.6 million, or roughly $442 per square foot. The buildings are located at 1500 Broadway, 405 14th Street and 409 13th Street.

The properties also have two big-name investors involved.

Thom Beers, the television producer behind “Deadliest Catch,” and Lukasz Gottwald, the record producer who goes by the name Dr. Luke and was the subject of a number of lawsuits from singer Kesha alleging sexual assault and abuse, are both investors in the properties. Beers owns a 20 percent stake, according to a Morningstar report, while Gottwald owns 5 percent.

Few office buildings in Oakland have traded in the last year, making it difficult for buyers and sellers to estimate pricing. However, Swig and SKS recently bought an office tower at 350 California Street in Downtown San Francisco, a typically more expensive office market, for $205 per square foot.