SAN FRANCISCO — Starwood Property Trust (NYSE: STWD) has originated a $140 million first mortgage loan on the Phelan Building, an 11-story, 300,000-square-foot mixed-use building located in San Francisco's Union Square area. Thor Equities was the borrower.
Built in 1908 by former San Francisco Mayor James Phelan, the historic structure is one of the city's original flatiron buildings, standing as an architecturally distinct landmark at the junction of Market and O'Farrell streets and Grant Avenue.
The Phelan Building is located in the heart of the city’s premier retail shopping district, one block from Westfield San Francisco Centre, an upscale urban shopping center, and across the street from the Four Seasons Hotel.
“We are pleased to provide this transitional capital to help further the sponsor's plan to reposition one of San Francisco's most historic buildings to meet the needs of the city's high-profile technology firms and other businesses seeking truly creative office space,” says Boyd Fellows, president of Greenwich, Conn.-based Starwood Property Trust.
The property encompasses approximately 250,000 square feet of office space and 50,000 square feet of retail space. Marshalls recently signed a lease to occupy a large, corner retail space at the Phelan Building. Thor Equities has continued to convert office floors from more than 500 small jewelry spaces to full-floor creative office use.
Most recently, The Obvious Corp., led by Twitter founder Evan Williams, leased three floors of the renovated and repositioned office space. With its Victorian architecture, central light well providing ample natural light, two-story marble lobby and operable windows, the building is ideal to meet San Francisco's tenant demand for creative office use, according to Starwood.
New York-based Thor Equities is an international real estate development company that specializes in value-added investments in shopping centers and mixed-use urban developments in the United States, Europe and Latin America. Some of the high-profile properties in it portfolio include The Palmer House in Chicago, the Burlington Arcade in London and 426 Masaryk in Mexico City.
Starwood Property Trust invests in, finances and manages commercial mortgage loans and other commercial real estate debt investments and commercial mortgage-backed securities.
The stock price of Starwood Property Trust closed Thursday, July 18 at $25.12 per share, up from $22.06 per share a year ago.
— Matt Valley