Paramount Group Explores Sale of Debt on San Francisco’s Market Center

Paramount Group and its lenders are exploring a potential sale of the debt on Market Center ahead of the impending maturity of a $402-million acquisition loan backed by the two-building office property in San Francisco’s Financial District, reported the San Francisco Business Times. The New York City-based office REIT and lender ING have tapped Eastdil Secured as an advisor, according to multiple people familiar with the matter who weren’t authorized to speak publicly.

Listing the debt for sale could enable a prospective buyer to acquire the loan and then take ownership of Market Center, a 750,000-square-foot office complex at 555-575 Market St. It would represent the largest office property to come to market since before the pandemic, the Business Times reported.

Paramount and an unidentified joint venture partner acquired Market Center from Blackstone in 2019 for $722 million. The company has already signaled doubts about Market Center’s future, telling analysts in February that it had written its investment in the property down to zero.

The write-down occurred a year after Paramount wrote off its investment in 111 Sutter, a 293,000-square-foot office tower in downtown San Francisco. Both properties were hit by significant lease expirations amid declining office fundamentals.