Lakeside Group is poised to acquire a 15-story office building near Downtown Oakland after closing on the purchase of a troubled $95 million loan tied to the property.
The locally based investor bought the nonperforming loan tied to the 279,700-square-foot building at 180 Grand Avenue near Adams Point, the San Francisco Business Times reported.
The seller of the loan was not disclosed. Lakeside picked up the loan through a note sale for $108 per square foot, or $30.2 million, according to the firm.
.
In February, the unidentified lender acquired the property near Lake Merritt when it was surrendered by Oakland-based Harvest Properties and AXA Investment Managers, based in Paris. It was 72 percent occupied.
Harvest and New York-based KKR bought the rectangular glass tower in 2017 for $119 million, or $425 per square foot. Two years later, KKR sold its stake to AXA for an undisclosed price.
JLL held the listing for the nonperforming loan
The debt purchase could ultimately give Lakeside ownership of the building. For the newly formed firm led by Isaac Abid, it’s a value-add opportunity.
“We believe in a flight to quality, where the best buildings offering a unique experience will be the ones to successfully attract companies back to the workplace,” said Alec Haley, principal of Lakeside Group, in a statement. “180 Grand presented a rare opportunity to invest in a top-tier asset at an attractive basis, positioning us to remain highly competitive in the market.”
This deal marks one of the first large purchases by Lakeside, founded in February by Abid, who previously worked with HP Investors, based in San Diego.
Lakeside is a real estate company focused on value-add opportunities across Northern California and invests on behalf of institutional partners, family offices and high-net worth investors, according to its website.
This month, HP Investors announced that Lakeside Group would take control of its 500,000-square-foot Northern California portfolio as part of a corporate restructuring. HP will remain an investor, but eventually plans to shed its stake.
The loan purchase could help reset office values around Downtown Oakland.
Office vacancy in the 12 million-square-foot central business district was 31.8 percent in the quarter ending in June, up from 30.2 percent in the prior period, according to CBRE, while crime has pushed some companies to leave the city.
Office landlords in Oakland have slashed rents, after holding steady through the pandemic shift to remote work.
In August last year, San Francisco-based Tidewater Capital surrendered an historic 10-story office building at 1440 Broadway, in Downtown, after defaulting on more than $25.5 million in debt. Its lender, New York-based credit REIT BrightSpire Capital, took control of the asset last year. It recently listed the property for sale.
In February, HP Investors defaulted on a $10 million loan tied to a 10-story office tower at 1700 Broadway, in Oakland’s Uptown. It was later sold to Agate Holdings for $2.75 million — 80 percent less than the $13.3 million HP paid for the building in 2017.
In April, New York-based CIT Group took control of a 116,000-square-foot building at 360 22nd Street.
— Dana Bartholomew
Read more
Commercial
San Francisco
Harvest and AXA surrender Oakland office tower with $95M loan for sale
Commercial
San Francisco
Tidewater Capital surrenders Oakland office building after default
Commercial
San Francisco
Harvest Properties and HP Investors default on East Bay office debt