UPDATED JAN. 17 at 11:50 a.m.:
Stockbridge Capital has lost an historic 11-story office building in Oakland to a lender after failing to pay a mortgage of at least $35.5 million.
The San Francisco-based private equity investor handed the keys to the lender, CIT Bank, through a deed-in-lieu of foreclosure for The Leamington at 1814 Franklin Street, the San Jose Mercury News reported.
Stockbridge bought the 118,600-square-foot building in 2019. Oakland-based Harvest Properties was the seller and remains the property manager.
The landmark Spanish-style building, designed by W.H. Weeks and opened in 1926, was once the regal Leamington Hotel, where Amelia Earhart kept an office while charting her fateful flight. It closed in 1981.
Two years later, the terra cotta building was converted into creative offices.
CIT Bank seized control through a deed-in-lieu for $34.5 million, or $298 per square foot, which is less than the unspecified loan amount, according to the Mercury News. CIT, an online-only unit of First Citizens Bank, is expected to sell the building.
The Leamington is just the latest example of difficulties that confront the Oakland office market, as vacancies brought by a shift to remote work, together with crime, has diminished foot traffic.
In the fourth quarter ending in December, office vacancy in Downtown Oakland was 26.9 percent, up from 23.8 percent in the prior period, according to Colliers.
During the final three months of last year, the average asking rent for offices in greater Oakland was $3.81 a square foot, down 1.6 percent from the third quarter ending in September, and down 7.1 percent year-over-year.
Stockbridge Capital, run by Terry Fancher and Sol Raso, both managing executive directors, is a private-equity real estate fund management firm with $33.9 billion in assets, according to its website. In California, its investments include apartments on Treasure Island and Worthe Real Estate’s purchase of the Burbank Studios from Warner Bros. in Burbank.
Correction: Previous story incorrectly identified the owner of the property.
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