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June 09, 2017  

Shorenstein, Blackstone Seek SF Office Loan

A partnership between Shorenstein Properties and Blackstone is seeking as much as $283 million of debt as it recapitalizes a San Francisco office building.

The mortgage would be backed by the 596,000-square-foot property at 45 Fremont Street. Shorenstein owns a 51% interest in the building, and Blackstone has agreed to buy the remaining 49% stake from MetLife. The transaction values the tower at some $475 million.

Shorenstein, of San Francisco, and New York-based Blackstone are asking for quotes at several levels of proceeds. They include $240 million, or about 50% of the building’s value, and $283 million, representing leverage of around 60%.

The preferred term is five years. Eastdil Secured, which is pitching the assignment to lenders, took the initial round of bids a little over a week ago. The brokerage is also advising MetLife on the stake sale.

The 34-story tower was developed in 1978. Shorenstein has owned it for several decades, with MetLife as its partner for many years. The property has been renovated several times, and has a LEED gold designation.

The occupancy rate is 99.5%, according to CoStar. Among the largest tenants are Wells Fargo (250,000 sf), the California Department of Insurance (62,000 sf) and the California Coastal Commission (28,000 sf).

The aluminum-and-glass-sheathed tower stands mid-block between Market and Mission Streets, in the South Financial District. It is sometimes referred to as the Bechtel Building for its developer, Bechtel Group, which has its headquarters in an adjacent building at 50 Beale Street. The two properties overlook Beale Street Plaza, a landscaped public space featuring a restored railroad car that housed Bechtel family members at construction sites in the Western U.S. nearly a century ago.