(Bloomberg)—A $1.2 billion mortgage on a San Francisco complex co-owned by former President Donald Trump has landed on a lender watchlist as the cost of floating-rate debt rises.
The owners have the option to extend the loan on the buildings, which include the 52-story tower at 555 California St., for another year, the first of five possible one-year renewals. Trump has a 30% stake in the properties, with Vornado Realty Trust owning the rest.
Higher rates have ramped up the pressure on commercial landlords, causing extensions to become costlier. Debt service costs for the San Francisco properties have increased 38% since the loan’s origination, according to a February report on the debt compiled by Bloomberg.
The three buildings, which were appraised at $2.05 billion in March 2021, were nearly 95% occupied at the end of 2022, Vornado said in a filing earlier this month. The February report said rent revenue was more than two times the cost of servicing the debt on the properties.
While the Trump and Vornado properties has been able to lure tenants, San Francisco’s office market has suffered more than most US cities from falling demand given the rise in remote work and tech industry layoffs. The city’s office vacancy rate climbed to 27.6% in the fourth quarter, CBRE Group Inc. reported.
Representatives of the Trump Organization and Vornado didn’t immediately reply to requests for comment.
To contact the author of this story: John Gittelsohn in Los Angeles at [email protected].
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