Blackstone Abandons $20 Million Deposit on Scrapped Office Deal
BloombergApril 1, 2020
(Bloomberg) -- Blackstone Group Inc. is abandoning plans to buy an office building in Oakland, California, that’s leased to payments company Square Inc., according to people familiar with the matter.
The private-equity giant will forfeit a $20 million deposit it made to purchase the 397,000-square-foot building, known as Uptown Station, said the people, who asked not to be identified discussing the private negotiations.
Commercial real estate investors are reevaluating plans with huge swaths of the U.S. locked down to slow the spread of the coronavirus. Blackstone’s deal to buy Uptown Station from CIM Group for about $400 million was seen just weeks ago as a symbol of Oakland’s draw for property owners who wanted to bet on the technology industry’s expansion outside of San Francisco.
Blackstone had planned to purchase the building through its non-traded real estate investment trust, BREIT. The firm decided to walk away after recent changes in the lending market, one of the people said. Blackstone is still actively pursuing real estate acquisitions, sales and financings, according to the person.
A spokeswoman for CIM didn’t immediately respond to a request for comment. Institutional Real Estate previously reported that the deal had fallen apart.
Uptown Station has been a symbol of tech’s migration to Oakland. Uber Technologies Inc. purchased the shuttered 1920s-era Sears store in 2015 with plans to renovate it for a major East Bay outpost. That effort unraveled two years later as the ride-hailing company stumbled. CIM bought the property in late 2017 for $180 million with a plan to complete the remodel.
Square signed a lease for the office a year later, giving it room for as many as 2,000 employees. On its website, the payments company says it’s “hella proud” of its newest office.
Public health officials in the San Francisco Bay Area have extended an order for people to stay at home through May 3.
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