PIMCO’s Columbia Property Trust defaults on $1.7B of office loans
Mortgage tied to seven-building portfolio spanning NY, SF
Columbia Property Trust, a large office landlord controlled by PIMCO, has defaulted on $1.7 billion in loans tied to seven buildings across the country, marking one of largest office defaults since the start of the pandemic.
The firm is now working with its lenders — a group that includes Goldman Sachs, Citigroup and Deutsche Bank — to restructure its portfolio, according to Bloomberg. The loans were all floating rate, meaning Columbia Property Trust started to feel pain after interest rates soared last year.
The loans are tied to three office buildings in New York, two in San Francisco, one in Boston and one in Jersey City — a portfolio that was most recently appraised at $2.27 billion in 2021.
The New York properties are 245 West 17th Street, 315 Park Avenue South and the office portion of 229 West 43rd Street.
Columbia bought the 481,000-square-foot office piece of 229 West 43rd Street — the former New York Times building — for $516 million in 2015, SEC filings show. The default marks the second time the building has wound up in financial trouble in less than three years. In 2020, Kushner Companies, which owns a 250,000-square-foot retail condo at its base, defaulted on a $70 million mezzanine loan connected to the property.
Two of the properties in the portfolio — 650 California Street in San Francisco and 245 West 17th Street in Manhattan — are linked to Twitter, which made headlines late last year when new owner Elon Musk stopped paying rent.
Columbia sued Twitter in January for allegedly owing about $136,000 in back rent. The REIT, which PIMCO affiliates acquired in 2021, bought 650 California Street for $309.1 million in 2014, records show.
“We, like most office owners, are addressing the unique and unprecedented challenges currently facing our asset class and customer base,” Justina Lombardo, a spokesperson for Columbia Property Trust, told Bloomberg.
The news comes a week after Brookfield defaulted on $784 million worth of loans connected to two of its trophy office towers in Downtown L.A.
“An event of default has occurred” on both loans, a Brookfield subsidiary disclosed, adding “lenders may exercise their remedies,” which include foreclosure.