Jamestown defaults on $93M in loans tied to two SF office buildings

Jamestown has defaulted on $93.1 million in mortgages tied to two historic office buildings in Downtown San Francisco.

The Atlanta-based investment firm received notices of default on loans tied to its office properties at 116 New Montgomery Street and 731 Market Street, the San Francisco Business Times reported, citing public documents.

Jamestown joins a surge in mortgage defaults tied to office buildings across the city, raising the  risk that more properties will be turned over to their lenders.

An undisclosed lender issued a default notice last month for a $60.6 million loan for the 135,500-square-foot Rialto Building on New Montgomery Street. The loan came due in March.

In July, an undisclosed lender issued another default notice for a $32.5 million loan for the 93,000-square-foot building on Market Street. The loan, due in April, had $25.5 million in unpaid debt.

Jamestown bought both buildings in 2015, according to the Business Times. It paid $111.1 million, or $820 per square foot, for the now 121-year-old building on New Montgomery. And it paid $65.5 million, or $700 per square foot, for the now 115-year-old building on Market.

A once soaring office market fueled by tech companies in San Francisco fell back to earth during a shift to remote work during the pandemic. Some 34 percent of the city’s office buildings stand empty. More than a year’s worth of rising interest rates have made refinancing difficult for building owners.

Jamestown intends to work with its lender in an effort to keep 116 New Montgomery, an unidentified source told the Business Times. Since 2021, Sigma Computing has expanded its offices in the building to 83,000 square feet.

Since late last year, JLL has marketed all five floors of offices in the building at 731 Market for lease. Early last year, CVS closed its pharmacy on its ground floor, though its lease hasn’t expired.

In San Francisco, Jamestown also owns the landmark Ghirardelli Square, the 930,000-square-foot Levi’s Plaza and a 42,000-square-foot office and retail building at 660 Market Street.

In July, the real estate firm was in talks with the City of Concord in the East Bay about converting a 300,000-square-foot empty office building into an indoor farm for fruits and vegetables.

— Dana Bartholomew

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