Blackstone’s Loan on Schwab Building Hits Special Servicing, Modification Underway

The transfer to special servicer Midland Loan Services is a step in the process as Blackstone works to secure the loan extension, a source familiar with the transaction said. 

“This is a procedural step needed to effectuate a change to the term of the loan, which requires approval from the special servicer,” a Blackstone spokesperson told CO. 

Charles Schwab currently leases all 17 floors at the tower through April 2028 — earning the building the moniker the Schwab Building — but the company announced last year it would shrink its footprint overall amid office headwinds and reduce space at the building to six floors, The Real Deal reported. 

Schwab’s plan to potentially sublease that space has no impact on the cash flow of the building, however, since Schwab has a legal obligation to pay its rent through 2028, when the lease term ends, a source said. 

“This building is 100 percent leased to a high-quality, credit-worthy tenant through 2028,” the Blackstone spokesperson said. 

A Trepp report Friday also announced the transfer. 

 The office building sits in San Francisco’s South Financial District, with close proximity to Bay Area Rapid Transit, the Ferry Building and Salesforce Park. It was erected in 1973 and comprises 416,000 square feet. 

Blackstone acquired the building in March 2017 from CIM Group for $293 million and took out the CMBS loan that same year. 

San Franscisco’s office market has changed dramatically since then, with remote and hybrid work pummeling the city. Pricey West Coast cities are the worst hit, Fortune reported, citing a Capital Economic report, and things could get bloodier. 

Cathy Cunningham can be reached at ccunningham@commercialobserver.com.