Vanbarton Group poised to lose SF office building after defaulting on $93M loan

The lender of a $93 million delinquent loan to Vanbarton Group could allow investors to take control of a 22-story office tower in San Francisco for half of what it sold for six years ago.

ING Capital is selling the non-performing loan tied to 101 Mission Street, a 213,700-square-foot tower in the Financial District, the San Francisco Chronicle reported. The asking price: $80 million, according to an unidentified source.

Vanbarton, based in New York, bought the 213,700-square-foot building in 2018 for $163 million, or $763 per square foot.

CBRE is marketing the nonperforming loan for $80 million, which could allow a buyer to take control of the Class A building for $374 per square foot.

A marketing brochure obtained by the Chronicle states Vanbarton recently defaulted on the loan. CBRE, selling the debt on behalf of New York-based ING Capital, declined to comment to the newspaper.

The LEED Gold tower at Mission and Spear streets near the Embarcadero, once considered prime real estate in the city’s Transbay District, is 78 percent leased, according to the brochure.

The brown granite building, built in 1984, has multiple roof decks. Since its purchase six years ago, Vanbarton has sunk more than $29 million into common areas and tenant suites, including a penthouse on the 22nd floor. The firm has spent $8 million to upgrade its lobby and elevators.

Commercial real estate mortgages are coming due across San Francisco, where office vacancy just hit a record 37.3 percent following a tech-driven shift to remote work.

The empty offices and higher interest rates have led to a collapse in the office market, with loan delinquencies, building foreclosures and fire-sale discounts, often to daring local investors. As in all things real estate, however, location matters.

An analysis by The Real Deal found that prominent leases and office sales point to neighborhood-by-neighborhood differences in desirability — with hot spots beginning to emerge in the market.

Vanbarton Group, founded in 1992 by Gary Tischler and Richard Coles, has since invested $9.2 billion in more than 18 million square feet of commercial real estate, and now owns property in 33 states, according to its website.

— Dana Bartholomew