Former President Donald Trump will remain the minority owner of the former Bank of America headquarters building at 555 California St. in San Francisco after his company and its partners abandoned efforts to sell the tower and instead refinanced it.

On his website Wednesday, Trump announced that the refinancing deal on the property had closed in a single-sentence statement. “A loan of $1.2 billion has closed on the asset known as the Bank of America Building (555 California Street) in San Francisco, CA. The interest rate is approximately 2%. Thank you!”

The Trump Organization owns 30% of the building, which was previously the Bank of America headquarters.

The pithy Trump news release came about a week after Vornado Realty Trust, which owns a controlling 70% interest in the tower, announced that it had completed the refinancing of the tower, a 1.8 million-square-foot building known for its black marble “bankers heart” sculpture in the plaza outside.

The loan, which matures in 2028, has an interest rate of 1.93% in its first five years, 2.18% in the sixth year and 2.43% in the seventh year.

The decision to hold on to the building is not surprising given the low interest rate and the lack of investment activity at the moment, according to Colin Yasukochi, research director at CBRE. Investors are either looking for buildings with high-quality credit tenants with long-term leases or buildings that are deeply discounted due to the pandemic.

“Neither are readily available,” said Yasukochi.

The 555 California St. tower is one of two buildings in which Trump is a minority investor alongside Vornado. The other is the 1290 Avenue of the Americas building in Manhattan. The partnership attempted to sell both for about $5 billion last fall, but the deal fell through.

In a Nov. 4 earnings call with analysts, Vornado Chief Executive Officer Steven Roth said that his company and the Trump Organization were still marketing the two buildings.

“There is active interest from investors and the widespread appreciation for quality of these assets. But given investor caution, it does not look like we’re going to achieve our original top tick pricing objective,” he said. “Nevertheless, we continue to actively pursue a transaction involving these assets, which may take the form of a sale, a partial sale, a joint venture or a refinancing.”

Commercial rents in San Francisco and New York have dropped during the coronavirus pandemic, and the once-hot office sales market has cooled off significantly. Several San Francisco office buildings, including 350 California St. and 123 Mission St., were also pulled from the sales block after eliciting scant interest. The landmark Transamerica Pyramid building sold in late October for $650 million, $50 million less than it was in contract for before the pandemic hit.

For the first time in five years, San Francisco lost its status as the country’s most expensive office rental market, with asking rents falling below Manhattan. Compared to the first quarter of last year, San Francisco rents dropped 14.8% to $75.32 per square foot, less than Manhattan’s asking rents of $75.99 per square foot, according to brokerage CBRE.

J.K. Dineen is a San Francisco Chronicle staff writer. Email: Twitter: @sfjkdineen

Source Google News