Blackstone, Paramount nail extension for $975m San Francisco office loan

The loan on One Market Plaza, a San Franciso office tower, was one of the largest CMBS loans slated to mature in 2024.

San Francisco’s office market last week saw a potential bright spot amid its continued struggle to regain its pre-pandemic form in the commercial real estate debt market with the extension of a $975 million commercial mortgage-backed securities loan on One Market Plaza, a prominent office property in the city owned by Paramount Group and an affiliate of Blackstone.

The sponsors, both New York managers, outlined plans to modify and extend the loan linked on February 6. Prior to the modification, the 1.6 million square-foot, two-building trophy office represented the largest maturing US CMBS office loan between 2023-24, according to New York-based data provider Trepp. The loan was securitized in a single-asset deal, OMPT 2017-1MKT.

Paramount and its joint venture partner Blackstone Property Partners paid down $125 million of the loan to reduce its balance to $850 million. The loan’s prior fixed rate of 4.03 percent has also been bumped 5 basis points to 4.08 percent with maturity set for February 2027. The borrowers will also have an option to extend for a year after that mark, pending conditions undisclosed at the time of publication.

“This transaction is a not only a testament to the quality of the asset, but also a testament to the quality of the sponsorship and its commitment to the asset,” said Wilbur Paes, chief operating officer, chief financial officer and treasurer at Paramount.

Per Trepp, a January note from One Market Plaza’s special servicer indicated a significant capital contribution by Paramount and its joint venture partner would be applied to pay down the loan with the remainder deposited with the lender to support future cash needs of the property. After that loan, a $750 million loan backed by New York’s 277 Park Avenue is the next largest CMBS loan slated for maturity this year.

Trepp noted it remained to be seen what, if any, cash would be deposited with the lender to address the future cash needs of One Market Plaza. Global technology giant Google is One Market Plaza’s current top tenant with 21.6 percent of the space on a lease that ends in 2025.

Trepp said while Google has announced it will be downsizing its office footprint nationally, it is unclear how One Market Plaza will be affected. Following Google, Visa is the second largest tenant with 10.2 percent of the space on a lease that ends in 2026.

One Market Plaza’s loan extension comes as a similar $1.1 billion CMBS package backed by New York’s 280 Park Avenue entered special servicing at February’s start. Special servicer Wells Fargo stipulated New York-based real estate investment trusts SL Green Realty Corp and Vornado Realty Trust would need to contribute substantial equity for 280 Park Avenue’s loan to be extended.