After a period of declining value and uncertainty, the $350 million loan tied to 225 Bush Street in downtown San Francisco is expected to be put up for sale. According to the San Francisco Business Times, lenders have started the process of selling the nonperforming loan, with the special servicer reportedly in talks with JLL about listing it on the market. No formal listing has been announced yet.
The building’s owner, Kylli—a subsidiary of Genzon Investment Group from China—defaulted on the loan in November 2024. Since then, lenders have considered several options to resolve the debt, including negotiating with Kylli, selling the debt, or pursuing foreclosure. If sold, a new buyer could either foreclose on 225 Bush Street or negotiate with Kylli for ownership of the 580,972-square-foot property.
Kylli acquired most of 225 Bush Street in 2014 when its value was estimated at $350 million. In 2019, after buying out a minority stake from Flynn Properties and refinancing with a $350 million loan, the building was appraised at $589 million. However, after missed payments last December, its appraised value dropped sharply to $153 million.
In August last year, lenders sued to place the building into receivership. Douglas Wilson of Douglas Wilson Companies was appointed as receiver and has worked with JLL on leasing since then.
The financial troubles at 225 Bush are part of a wider trend affecting San Francisco’s office market following the pandemic. Last month, Columbia Property Trust received a notice of default for missing payments on a $1.7 billion commercial mortgage-backed securities loan backed by multiple properties in San Francisco and elsewhere. In October, lenders began foreclosure proceedings at 55 Hawthorne Street after CIM Group defaulted on a $61.5 million loan.
