San Francisco Centre, formerly known as Westfield San Francisco Centre, has seen its value drop to $195 million, according to Morningstar Credit. This represents a decline of more than 80 percent from its appraisal of $1.2 billion in 2016.
The mall, located at 865 Market Street and spanning 1.5 million square feet across two nine-story buildings, is the largest shopping center in San Francisco. Currently, only 7 percent of its retail space is occupied after major tenants such as Nordstrom, Bloomingdale’s, Zara, Steve Madden and Kate Spade have left the property. Bloomingdale’s was the last anchor tenant with a lease for 340,000 square feet; it closed earlier this year even though its lease was scheduled to run until 2046.
Unibail-Rodamco-Westfield and Brookfield Properties stopped making payments on a $558 million note several years ago. The total exposure now stands at $626 million. The lender is negotiating with the ground lessor regarding a ground lease default and intends to proceed with foreclosure soon.
“Upon foreclosure, Lender will immediately market for disposition,” according to special servicer commentary provided by Morningstar.
A notice of trustee’s sale was filed in October last year. Although the foreclosure auction has been postponed multiple times, Morningstar now says an “imminent outcome” is expected. The property reported operating losses of about $4.6 million during the first half of this year. When the current loan was underwritten in 2016, the mall generated approximately $57 million.
