Alexandria wants to boot TMG from office project in SF’s SoMa

Alexandria Real Estate Equities wants to split the sheets with TMG Partners on their 775,000-square-foot office project in San Francisco’s South of Market.

The Pasadena-based real estate investment trust has asked a court to find its development management agreement with San Francisco-based TMG “has no continuing force or effect” — legal speak for kaput at 88 Bluxome Street, the San Francisco Business Times reported.

If the dissolution is upheld by the court, TMG would leave the project.

In 2015, Alexandria bought the block-long Bay Club San Francisco Tennis at 88 Bluxome for $140 million. When the club closed two years later, Alexandria bulldozed the city’s largest tennis facility.

From the beginning, Alexandria teamed up with TMG to oversee its redevelopment into a 1.1 million-square-foot office and replacement tennis club. Alexandria’s development agreement with TMG expired Dec. 31.

Neither Alexandria nor TMG requested an extension of that agreement before its term was up. 

But after the Pasadena REIT told the San Francisco developer last month their development agreement had ended, TMG asked to extend it through 2025.

Alexandria’s rejection is the latest in a turbulent series of legal twists and turns for a project that in nearly a decade hasn’t been able to cross the net.

The project, first proposed in 2015, was once slated to include 775,000 square feet of offices and a 134,000-square-foot tennis club. TMG, as development manager, won city approvals in 2019. 

In 2021, Alexandria made the controversial decision to scrub the club, which it had pledged as part of a replacement package. The decision came after Pinterest, the project’s anchor tenant, canceled its 490,000-square-foot lease signed in 2019 before a pandemic shift to remote work.

A nonprofit recreation group appealed the decision to drop the club. Then when Alexandria tried to peddle what had turned into a biotech office project, the group sued to enforce a 2016 agreement that required Alexandria to get its permission before selling the project site. 

The lawsuit resulted in a $7.5 million settlement.

The Planning Commission approved the Alexandria-TMG project without the tennis club in July. But a groundbreaking appears unlikely any time soon: The project remains without an anchor tenant, and Alexandria’s long-term intentions for the site are no longer clear.

TMG’s attorneys said Alexandria should honor its request for an extension of the development agreement because the terms don’t explicitly say an extension request must be made before the end of its term, according to the Feb. 5 complaint.

Alexandria’s lawyers reject that claim, but note Alexandria had also taken the step of sending TMG a notice that it was “immediately and irrevocably” terminating the agreement between both firms on Feb. 5. 

— Dana Bartholomew

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