55 Hawthorne Street appears to be headed to foreclosure.
Lenders are seeking to foreclose on the property and place it into receivership, the San Francisco Business Times reported. A lawsuit filed in San Francisco Superior Court alleges that an affiliate of Los Angeles-based CIM Group defaulted on a $61.5 million loan backed by the property after failing to make its monthly payments since the beginning of August.
The loan was placed into special servicing in July. Yelp’s lease of the entire 136,432-square-foot building was set to expire that month.
At the time, commercial mortgage-backed securities bondholders learned that “imminent default” was the reason for the loan transfer to a special servicer. Earlier this month, notes confirmed the servicer is gathering information about the building while figuring out “workout strategies deemed appropriate to achieve the highest net present value recovery.”
If lenders are successful in the foreclosure seizure, they could sell the building and use the proceeds to recover some or all of the delinquent $61.5 million loan.
Yelp has been a tenant at 55 Hawthorne since 2014 and has been subleasing out some of its space in the building since before the pandemic. After COVID hit, the company listed its entire footprint at 55 Hawthorne for sublease. Over the past decade, Yelp subleased its space to companies like NerdWallet and Motive, though notes sent to bondholders in July said most of the subtenants were expected to leave the building after Yelp’s master lease expired July 31.
CIM listed the property for sale in the spring of 2024, purportedly out of fear for the building’s value once Yelp left, though no deal was ever signed. CIM acquired the property in 2016 for $123 million, or $900 per square foot; its listing price last year wasn’t disclosed. The company was seeking lease tenants this summer as it faced a massive clearing-out of space.
— Chris Malone Méndez
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