The owner of two iconic San Francisco office properties is likely to give them up as major tenants pull out and the final due date for debt payments draws nearer, according to an earnings call with the New York real estate firm the Paramount Group.
One of the properties is known as the Market Center, a 770,000-square-foot brutalist office complex split across two buildings at 555 and 575 Market St. in the middle of the Financial District. The complex used to serve as the headquarters for Standard Oil and Chevron.
The other is a neo-gothic structure a block away at 111 Sutter St. that was the fictional address of private detective Sam Spade’s office in the noir novel The Maltese Falcon, which in 1941 was made into a classic film starring Humphrey Bogart.
Paramount executives said in the Feb. 15 earnings call that they are in negotiations with their lenders on the two properties, but both investments have already been marked down to zero on company books. Executives say debt on the buildings far exceeds their current market value.
“[T]here is a strong possibility that these assets may not be in the Paramount portfolio going forward,” Paramount Chief Operating Officer Wilbur Paes said on the earnings call. “They are currently a drag on occupancy, a drag on earnings, a drag on leverage, and we get no credit for it in our stock price.”
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