Blox Ventures has bought a troubled loan tied to an eight-story office building in Emeryville, positioning the firm to pick it up for a steeply discounted price.
The San Francisco-based investor paid $6.8 million for the mortgage loan for the 109,300-square-foot building at 6001 Shellmound Street, the San Francisco Business Times reported. The seller was PNC Bank.
Owner Sagard Real Estate, formerly EverWest Real Estate Investors, bought the property in 2017 for $33 million, or $302 per square foot, taking out a $21.61 million loan that matured in December.
It looks like the Denver-based landlord wasn’t current on its payments and PNC Bank sold the loan instead of seizing the property through foreclosure, according to the Business Times. The Class A building, built in 1989, was revamped in 2017, according to LoopNet.
The $6.8 million loan purchase positions Blox to acquire the office property through a deed-in-lieu of foreclosure, or initiating the foreclosure process. Its potential cost for the building: $62 per square foot, 79 percent less than its last traded price.
The deal joins other East Bay office properties selling for a fraction of what they were once worth following a pandemic shift to remote work, resulting in high vacancy. With higher interest rates and refinancing costs, many landlords have struggled to keep their buildings.
This fall, Lakeside Group and Rubicon Point Partners acquired a 15-story, 279,700-square-foot building and parking garage at 180 Grand Avenue, near Downtown Oakland, through a deed-in-lieu of foreclosure, after buying its loan for $30.2 million, or $108 per square foot.
The Emeryville offices secured by the loan bought by Blox was 60 percent leased.
Jason Oberman, CEO of Blox, said he made a bet on the building because of its location in the Emeryville Public Market, a retail and restaurant hub that Oberman called an “irreplaceable” boon for the property.
Despite soaring vacancies across the Bay Area, Oberman is confident that demand for offices will grow, citing AI companies and startups spinning out of UC Berkeley
“As people are looking to either come back to the office or are growing, having real amenities — not just a small gym, but real amenities and neighborhood feel — that is what this property has,” Oberman told the Business Times.
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“In good times and in bad times, this kind of property ends up being fairly resilient, because it is such a great place to work.”
Blox Ventures, founded by Oberman in 2015, owns more than 6 million square feet of commercial real estate valued at more than $3 billion across the Bay Area and in Salt Lake City, Utah, according to the Business Times and its website.