Columbia Property Trust has received a notice of default connected to its San Francisco office buildings, following the maturity of a major loan six months ago.
The company, based in New York, defaulted on a $1.7 billion commercial mortgage-backed securities loan in July. On December 17, lenders issued the notice of default, as reported by the San Francisco Business Times. The loan is secured by 650 California Street and 201 California Street in San Francisco’s Financial District, as well as five other office properties across the United States.
According to the notice, the debt has increased to $1.9 billion. If Columbia does not resolve the issue and repay what it owes, lenders may move forward with foreclosure proceedings.
The affected portfolio includes three office buildings in Manhattan, one in Boston, and one in New Jersey. Earlier this year, Columbia tried to sell debt backed by 201 California Street; negotiations were held with Ridge Capital Investors for a possible $75 million sale but no agreement was reached.
Columbia initially defaulted on the $1.7 billion loan—which was originated in late 2021 by Goldman Sachs, Citigroup, and Deutsche Bank—in January 2023. This occurred several months before its scheduled maturity date. The firm negotiated an extension that moved the maturity date to July 2025 and included an additional six-month extension option according to CMBS data cited by the Business Times. However, Columbia did not use this option or pay off the loan when it matured.
The combined value of these seven buildings was appraised at nearly $1.3 billion this year—a decrease from almost $2.3 billion in October 2021. Specifically, the appraised value of 650 California dropped from $479 million to $305 million during that period. Columbia purchased that building for $309 million in 2014; it was reported as being 87 percent occupied as of September 2024 based on lender data cited by the Business Times.
“Lenders could pursue foreclosure if Columbia doesn’t rectify the situation and pay back the money owed,” according to information from lenders referenced by Chris Malone Méndez.
