Bridgeton defaults on loan tied to nearly vacant SF office building

Bridgeton Holdings has defaulted on a loan tied to a mostly vacant office building in Downtown San Francisco. 

The firm is more than 30 days delinquent on a $45 million loan tied to 995 Market Street, according to Morningstar, which cited servicer commentary. The loan, originated by LStar Capital Finance, is now under special servicing. 

“The borrower has stated they will not be making any more payments,” special servicer Hudson Advisors said in an August note, cited by Morningstar. Bridgeton did not respond to a request for comment.

The building has sat mostly vacant since August 2021, when WeWork exited roughly 75 percent of the 91,000-square-foot space. WeWork opted to terminate its lease early — its original deal was set to expire in 2031. 

After WeWork left, net income at the property dropped dramatically, according to Morningstar data. At the end of the last year, the debt service coverage ratio on the loan — a measure of how much a property is making in income compared to its monthly debt payments — was below zero. 

About 92 percent of the building is currently available for lease, according to a LoopNet listing. 

Bridgeton was paying a fixed interest rate of 4.8 percent on the loan, which was set to mature in 2026. 

Many office owners have suffered from WeWork shrinking its physical footprint across the U.S. as the co-working company struggles financially. In San Francisco, Chicago-based GEM Realty Capital’s $24 million loan on 222 Kearny Street has gone to special servicing — a building also leased to WeWork. 

In New York City, the owner of 315 West 36th Street defaulted in July after WeWork quit paying rent at the property. 

Bridgeton bought 995 Market Street for $62 million in 2018, records show.