- New York Life Real Estate Investors and Lincoln Property Company are negotiating to purchase a delinquent loan on the 23-story office tower at 353 Sacramento Street in San Francisco.
- The loan, originally $101.6M, could be acquired for as low as $57M, translating to just over $200 PSF—a deep discount from prior valuations.
- If the deal closes, it would be NY Life’s third office investment in San Francisco since the pandemic, signaling renewed institutional confidence in the city’s embattled office sector.
A Strategic Comeback Play
New York Life and Lincoln Property are in talks to buy a troubled loan tied to 353 Sacramento Street, as reported by The Real Deal. The 284,750 SF office tower sits in San Francisco’s Financial District. The deal, if it closes, would mark NY Life’s third San Francisco office acquisition since spring 2023.
The tower’s loan, originally issued by Germany’s Aareal Capital at $101.6M, was last reported to have an $89.6M balance. However, sources say the loan could now trade in the low $200 PSF range, valuing the deal at around $57M—a massive haircut from prior valuations.
Falling Values And Missed Deals
This wouldn’t be the first attempt to offload the debt. In late 2023, Shoe Palace CEO George Mersho was in talks to buy the loan for $76.9M, or $270 PSF, but that deal ultimately collapsed.
Originally purchased for nearly $170M in 2016 by a KBS affiliate, the building’s value has plunged in the wake of the pandemic. By the end of 2023, its fair market value had been revised down to $98.8M, according to filings from Pacific Oak Capital, which now manages the property with co-owner Migdal Insurance of Israel.
If NY Life closes the deal, it could take control of the asset at 66% below its last sale price and 42% under current market estimates.
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A Growing San Francisco Footprint
The move would reinforce New York Life’s growing confidence in San Francisco’s recovering office sector. The firm was the first institutional investor to reenter the market post-COVID, buying 410 Townsend Street last April for $22M. More recently, NY Life and Lincoln went under contract to purchase 600 Townsend Street for $63M, or $300 PSF.
Why It Matters
The potential acquisition underscores a broader shift in investor sentiment. Distressed opportunities in gateway cities like San Francisco—where office prices have tumbled amid remote work and rising vacancies—are attracting attention from deep-pocketed investors with long-term outlooks.
With $69.7B in assets under management, NY Life Real Estate Investors seems poised to continue betting on the city’s rebound—at a steep discount.
