MOUNTAIN VIEW — A lender has seized two big office buildings in a tech-rich section of Silicon Valley, disquieting fresh evidence that the Bay Area’s commercial property woes have yet to run their course.
The buildings are located at 515 and 545 North Whisman Road in Mountain View, according to documents filed on March 19 at the Santa Clara County Recorder’s Office.
A growing number of foreclosures involving Bay Area office buildings, hotels and even a big regional shopping mall in San Francisco have roiled the region’s real estate sector over the last couple of years.
A group headed by Parlex 2A Finco has grabbed ownership of the buildings through a process known as a deed in lieu of foreclosure, the county records showed.
The borrower that lost ownership of the buildings was an affiliate headed up by TPG Angelo Gordon, a New York City-based real estate investment firm, according to county and state business records.
The buildings together total about 153,400 square feet. Each building totals about 76,700 square feet, according to a marketing brochure.
Sky-high interest rates and brutal inflation have coalesced into an ominous combination that has whipsawed commercial property owners in the Bay Area and nationwide.
Even worse, soaring office vacancy levels and faltering office rents now pose additional complications for real estate developers and investors.
In 2021, the Angelo Gordon-led group paid $100.5 million for the North Whisman buildings, county records show.
Tech security companies Norton LifeLock and Symantec sold the office buildings to the Angelo Gordon group.
At the time of the 2021 purchase, the property investors landed a $102.1 million loan from the Parlex 2A Finco entity. New York City-based Blackstone Mortgage Trust controls the Parlex 2A affiliate.
When the foreclosure deed was filed this week, the amount of unpaid debt on the loan was $95.6 million, the county records show.
A commercial real estate brochure stated that the Angelo Gordon-headed affiliate had undertaken what was described as a “multi-million-dollar renovation” to make the buildings more attractive.
The renovation included a new central courtyard as well as updated lobbies and building exteriors.
The marketing brochure stated that the entire campus was available for lease. Google Maps lists the 545 North Whisman building as a Symantec site.
The loan for the office buildings was due to be paid in full within weeks. The original loan documents filed in April 2021 stated that the loan was scheduled to mature on April 9.
This means the owners faced the forbidding prospect of attempting to refinance the 2021 mortgage in an environment of expensive money due to the current high rates for real estate loans.
These aren’t isolated problems. Trepp, a provider of data insights, estimated in a December 2023 report that $2.81 trillion in commercial real estate debt nationwide was slated to come due by 2028.
To put the $2.81 trillion in maturing commercial real estate debt in perspective, in 2022, the nominal total economic output of France was $2.8 trillion while Russia was at $2.2 trillion, according to a World Bank estimate.
In 2024, $554.3 billion in commercial real estate debt nationwide was scheduled to mature, according to Trepp.
