One Of Twitter’s Office Landlords Defaults On US$1.7b Mortgage
USA – Columbia Property Trust, an office landlord that has sued Twitter for US$136,250 in unpaid office rent, has defaulted on loans collateralised by its 650 California Street office tower in San Francisco, where the social media platform occupies level 30 of the Hartford Building, reported Fortune Magazine on Saturday (25 February, SGT).
However, the issues faced by the real estate investment trust (REIT) owned by Allianz wealth management’s subsidiary Pimco is not just solely due to Twitter’s new owner, Elon Musk.
Debts backed by another six office buildings are also in default. Still, the Hartford Building has been appraised as the most expensive among the office assets at around US$500 million.
“We have engaged with our lenders on a restructuring of our loan on seven properties within our larger national portfolio,” said a representative of Columbia Property Trust, who described the current problems faced by the broader commercial property market as “unique and unprecedented.”
Notably, the REIT has defaulted on US$1.7 billion worth of loans. Not only does this impact more than 33 percent of its portfolio that comprises 18 properties, it is also reflective of the broader distress in the commercial property market since the start of the COVID-19 pandemic.
Many employees are simply refusing to return to their workplaces. Even Musk said last November that the average physical occupancy level at Twitter headquarters failed to even reach at least 10 percent.
Based on a report recently published by property consultancy Cushman & Wakefield (C&W), unutilised office space in the United States could reach 1 billion sq ft come 2030, with overall vacancy level in the country surpassing the 12 percent seen prior to the virus outbreak.
The dismal prospects of the country’s commercial real estate market has led to the unit prices of commercial property REITs such as SL Green Realty, Boston Properties, and Vornado Realty plunging between 40 percent and over 50 percent since February 2023, greatly exceeding the 13 percent fall in the Dow Jones US Select REIT Index.