CIM Group is on track to give up control of the Central Tower complex, a pair of SoMa office buildings on Market Street, after falling into default on a roughly $98 million loan tied to the site. The 21-story tower at 703 Market Street and the adjoining five-story building at 26 Third Street could land with the lenders by year’s end if a consensual foreclosure deal is finalized. It is another high-profile stress signal for San Francisco’s office market as major tech tenants continue to cut back on headquarters space.
According to The Real Deal, CIM is working on a consensual foreclosure agreement with its lenders, and bondholder notes tied to the debt suggest lenders expect to take control of the buildings by the fourth quarter. The publication reports that the note is in special servicing with Rialto Capital and that CIM said it was unable to keep up with monthly payments once its largest tenant’s lease ran out.
Loan Structure And CMBS Ties
Loan documents filed with the SEC show that the Central Tower mortgage sits inside a 2019 CMBS pool and that two promissory notes on the property total $98,000,000. The named borrowers are single-purpose LLCs wholly owned by a CIM affiliate, according to SEC records. The prospectus and term sheet spell out lender protections such as a hard lockbox and springing cash-management provisions that can be triggered if debt service is not met.
Unity's Downsizing Opened The Door
Unity Software, long the property’s largest tenant, has reduced its San Francisco footprint and now lists 116 New Montgomery as its principal office. Its 2024 SEC filing notes roughly 53,000 square feet in San Francisco under a lease that runs through August 2025, as shown in SEC filings. That contraction, combined with the lease rollover, created a revenue gap that CIM says it could not close without a loan modification, which helped set up the default.
How CIM Refitted Central Tower
CIM bought the Central Tower property in late 2013 for about $50 million and later invested roughly $45.7 million into renovating both the tower and annex. According to the CMBS prospectus, that overhaul lifted occupancy from around 87 percent at acquisition to about 98.5 percent by early 2019. The combined buildings total approximately 164,848 square feet, and underwriting shows Unity at one point occupied about 85,783 square feet of that space, according to SEC documents.
What Could Happen Next
If lenders proceed as outlined, they could take title through a consensual deed and then look to sell the property to recover losses, a path that The Real Deal reports they expect by the fourth quarter. It would be another entry in a growing list of troubled office deals for CIM, following a recent episode in which lenders sued over missed payments on a loan tied to 55 Hawthorne after Yelp reduced its lease. Taken together, the situations highlight how vulnerable some office owners remain when a single large tech tenant decides to slim down.
