Pressure is mounting for the Shorenstein real estate dynasty.
The longtime Bay Area office landlord’s defaulted or at-risk debt has reached $822 million, Bisnow reported. In addition to the debt mounting, Shorenstein Properties has already taken some losses. Last week, Metropolitan Life Insurance took ownership of Capella Tower in Minneapolis after Shorenstein couldn’t find a buyer for the second-tallest tower in the city’s downtown.
Led by CEO Brandon Shorenstein, the grandson of founder Walter Shorenstein, the firm dropped $255 million on the 58-story Capella in 2018.
Prior to the pandemic kneecapping the office market, the Shorensteins had reigned for decades as San Francisco real estate royalty. Forbes pegged the family’s net worth at $1.5 billion in 2015, and they are the namesake of Harvard’s Shorenstein Center on Media, Politics and Public Policy.
Shorenstein joins the ranks of struggling legacy office owners racing to stanch the bleeding. Billionaire Charles Cohen’s Cohen Brothers Realty faces $1.1 billion in distressed debt and Aby Rosen is staring down $2.5 billion in matured or soon-to-be-due loans, the Financial Times reported.
Trouble is also brewing at Shorenstein’s Washington Square, a Minneapolis office complex with high vacancy rates. Its $61.1 million loan landed in special servicing after maturing in December, but Shorenstein won an extension till December of this year, according to Bisnow. Now, the firm is scrambling to lease up the buildings and find a buyer for 20 Washington Square.
Shorenstein’s portfolio and mounting debts span markets across the U.S. The landlord is also facing a special servicer on the officer towers at 1818 Market Street and 1700 Market Street in Philadelphia. Occupancy dropped double-digits in both towers in recent years. The $188 million loan for 1700 Market Street matured in February, and the $223 million loan at the neighboring 1818 Market Street followed in March. Both remain in ongoing settlement discussions, the outlet reported.