San Francisco Centre’s value falls $1B after Brookfield, Westfield default

What’s the sum of defaulted loans, a Nordstrom exit and a hefty receivership filing? 

A $1 billion loss in value. 

San Francisco Centre, the sprawling Union Square mall that owners Brookfield and Unibail-Rodamco-Westfield stopped making mortgage payments on last year,  has lost nearly  $1 billion in its estimated worth. 

The 1.45 million-square-foot property was appraised at $290 million, down from its $1.2 billion valuation in 2016, according to Morningstar Credit Analytics, which cites special servicer commentary. 

Brookfield and Westfield stopped payments on $558 million in commercial mortgage-backed securities loans last year, prompting the CMBS lenders to sue to place the property into a receivership. 

A court-appointed receiver has the power to manage and operate the property, help lease it up and collect all rents. 

The lenders have also asked the receiver to sell the property to pay down the debt. 

Loan financials show the property was 47 percent occupied as of March last year. 

However, Nordstrom, one of its largest tenants, exited its 312,000-square-feet flagship store last August, bringing occupancy down to about 25 percent. 

Few commercial properties have seen their value take a 75 percent haircut, as Westfield has. 

SKS and Swig bought a 22-story office tower at 350 California Street for $61 million — about 75 percent less than what it was listed for in 2020. MUFG Bank, the seller, had owned the property for more than 30 years under its predecessor Union Bank. 

However, the mall’s valuation cut seems to be unique to this particular shopping center. Other retail properties have fared well, opening up the opportunity for a refinancing deal. 

Unibail-Rodamco-Westfield recently refinanced its Westfield Century City mall, located in the upscale L.A. office hub, with a $925 million CMBS loan. 

The city of San Francisco has come up with a plan to fix the mall. Mayor London Breed has proposed redeveloping the center into a soccer stadium, hiring Gensler to launch a feasibility study last summer. 

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