Lakeside and Rubicon Pay $30M for Oakland Office Tower

Lakeside Group and Rubicon Point Partners have acquired a 15-story office building and parking garage near Downtown Oakland for 75 percent of what it sold for seven years ago.

Affiliates of the locally based Lakeside and San Francisco-based Rubicon took ownership through a deed-in-lieu of foreclosure of the 279,700-square-foot building and 370-slot parking garage at 180 Grand Avenue, the San Francisco Business Times reported.

In August, the investors bought a troubled $95 million loan tied to the property, between Uptown and Adams Point, for $30.2 million, or $108 per square foot. The lender was not disclosed. At the time, Rubicon was not linked to the purchase.

In February, the unidentified lender acquired the property near Lake Merritt when it was surrendered by Oakland-based Harvest Properties and AXA Investment Managers, based in Paris. It was 72 percent occupied.

Harvest and New York-based KKR bought the rectangular glass tower in 2017 for $119 million, or $425 per square foot. Two years later, KKR sold its stake to AXA for an undisclosed price.

Harvest recapitalized the building in 2019, but later defaulted on loan payments, according to the Business Times.

“Taking this next step allows us to begin directly executing our business plan at 180 Grand and further enhance what is already a best-in-class office building,” Isaac Abid, managing partner at Lakeside, told the newspaper. “We look forward to sharing these details in the near future.”

The deal marks one of the first large purchases by Lakeside, founded in February by Abid, who previously worked with HP Investors, based in San Diego.

Last summer, HP Investors announced that Lakeside Group would take control of its 500,000-square-foot Northern California portfolio as part of a corporate restructuring. HP will remain an investor, but eventually plans to shed its stake.

The loan purchase could help reset office values around Downtown Oakland.

Last month, Colliers pegged Oakland office vacancy at 21.4 percent, with empty offices in its central business district at 23 percent. Other analysts have placed the city’s office vacancy at 29.7 percent, with a central business district vacancy between 33.4 percent and 35.7 percent.

Office landlords in Oakland have slashed rents, after holding steady through the pandemic shift to remote work.

In February, HP Investors defaulted on a $10 million loan tied to a 10-story office tower at 1700 Broadway, in Oakland’s Uptown. It was later sold to Agate Holdings for $2.75 million — 80 percent less than the $13.3 million HP paid for the building in 2017.

In April, New York-based CIT Group took control of a 116,000-square-foot building at 360 22nd Street.

In August last year, San Francisco-based Tidewater Capital surrendered a historic 10-story office building at 1440 Broadway, in Downtown, after defaulting on more than $25.5 million in debt.

Rubicon has had its own investment hurdles. In January, the firm led by Ani Vartanian and Razmig Boladian, and Canyon Catalyst Funds, surrendered an 85,200-square-foot office building in San Francisco’s Civic Center to their lender after defaulting on a $42 million loan.

— Dana Bartholomew