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Commercial
San Francisco

Blackstone extending deadline on $195M loan at former Schwab HQ in SF

Debt goes to special servicing, but borrower says it intends to keep the 17-story building

Blackstone Misses $195M Loan Deadline on Empty SF Offices
Blackstone's Stephen Schwarzman and 211 Main Street in San Francisco (Getty, Loopnet)

Months after Charles Schwab said it would ditch all but six floors at its former headquarters in San Francisco, building owner Blackstone has extended the deadline on its $195 million mortgage.

The loan taken out by the New York-based investor has been sent to special servicing for the 17-story, 415,900-square-foot office building at 211 Main Street, the San Francisco Chronicle reported.

The original maturity due date came and went this week, and Blackstone did not pay off the balance of the $195 million debt.

But Blackstone Group said it wants to keep the building, and called the transfer “procedural.” 

“This is a procedural step needed to effectuate a change to the term of the loan, which requires approval from the special servicer,” an unidentified spokesperson for Blackstone Group told the Chronicle, adding the building is “100 percent leased to a high-quality, credit-worthy tenant through 2028.” 

That tenant is Schwab, which moved its headquarters to north Texas three years ago, but which has four years left on its lease in San Francisco. In November, it moved out of all six floors, then put the remainder of the offices up for sublease. 

An extension of its loan maturity date allows the company time to negotiate new terms with its unidentified lender.

Blackstone didn’t say when it expects to receive approval from the special servicer, now acting on behalf of the lender. The firm also didn’t disclose whether it wants to sell the property to recoup its equity.

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The company bought the building in 2017 for $313 million, or $750 a square foot, after Schwab renewed its lease for all its offices. 

Blackstone tried and failed to sell the building in 2021 for $400 million. A sales brochure at the time indicated rents in the building were about 25 percent below market rate.

Office vacancy in San Francisco has hit a record 36.6 percent after a broad shift to remote work. The market challenge, exacerbated by higher interest rates, has depressed values. Landlords with troubled loans have given up once-valuable properties to their lenders.

Last fall, Blackstone sought to surrender its 346-room Club Quarters hotel at 424 Clay Street in the Financial District after defaulting on a $274 million loan.  

In January,  Blackstone and Paramount Group won an extension for a $975 million loan linked to a trio of office towers at the 1.6 million-square-foot One Market Plaza, in the Financial District, which was set to mature in February. 

In October, Bllackstone sold a three-building North Park office campus at 560-655 Davis Street in Jackson Square for $90 million, or $306 per square foot, or 63 percent less than it traded for in 2018.

— Dana Bartholomew

Correction: A previous version of this article incorrectly stated Blackstone was at risk of foreclosure, due to an error in the source article.

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Blackstone Group