Vornado and Trump Seek Extension on SF Tower Loan

Vornado Realty Trust and The Trump Organization have asked for an extension on their loan for 555 California Street in San Francisco, according to Trepp.

The loan on the 52-story office tower in San Francisco was put on a service watchlist last month, citing disclosures to bond investors.

The extension request isn’t uncommon, according to David Putro from DBRS Morningstar. The two-year loan came with five one-year extension options, which is common for large loan deals. The extension request was “contemplated at issuance.”

“In this case, so long as there has not been a default and the borrower extends the interest rate cap, they have the option to extend the loan,” Putro said in an email.

Vornado, based in New York, is the majority owner with 70 percent of the 1.35 million square foot complex once known as Bank of America Center. The Trump Organization, an entity owned by Donald Trump, is also based in New York and owns 30 percent.

The owners are on time with their $1.2 billion mortgage debt secured by the 55-story building. With rising interest rates, the property’s monthly debt payment has increased 38 percent since the May 2021 loan was made and totaled $6.6 million at the end of last month, according to financial filings.

Midland Loan Services is the master servicer of the mortgage debt, and it is currently reviewing the loan extension. Situs is the special servicer, which can help resolve issues between a lender and borrower.

Vornado said the property, the second largest office building in San Francisco, was 95 percent leased at the end of last year. Tenants include Bank of America, Kirkland & Ellis and Morgan Stanley. Bank of America renewed its lease in 2021 before the new loan was created.

The 10 largest tenants make up about 90 percent of rentable area in the building with a weighted average lease term of 8.4 years. The current weighted average rent is $83 per square foot.

Vornado tried to sell the building before landing the new loan, also considering buying out Trump’s stake. The property includes the tower at 555 California, a shorter building at 345 Montgomery Street and a third unidentified structure.

The office vacancy in San Francisco is nearly 28 percent, according to CBRE, which has put the city on a national watchlist for “the most empty downtown in America.”

Vornado Realty Trust’s challenges continue to show up on its balance sheet: The company wrote down the value of its real estate portfolio this month by $600 million.