TMG Partners, a prominent San Francisco real estate firm, is poised to acquire control of the historic office building located at 149 New Montgomery Street, an asset that has been significant in the city for over 118 years. This move represents a part of a broader spending trend by TMG, which has been linked to high-profile properties throughout the city this year.
The six-story office building has not only endured two major earthquakes but also faced several economic downturns since its establishment. Sources indicate that TMG will take over the debt associated with the property, which has climbed past $25 million due to interest and penalties.
The current owner, Monahan Pacific, based in San Rafael, defaulted on its mortgage back in February, prompting the lender to auction off the 76,000-square-foot property this month. Monahan Pacific had been actively marketing the building for sale while attempting to renegotiate the terms of its loan. The company originally purchased the property in 1998 for $11 million, which adjusts to approximately $21 million considering inflation. Subsequently, significant renovations and a full seismic upgrade were undertaken to make the building attractive to tenants.
According to the latest appraisal, last year the Class B office building was valued at $270 per square foot, reflecting nearly a 40% drop from its appraised value in 2014. There are currently two vacant floors, providing nearly 18,000 square feet available for lease. In addition, a coworking company, Werqwise, occupies 42,000 square feet that could also be leased, while tech firm Marin Software is undergoing dissolution, which could free up additional space.
TMG Partners has opted not to comment on the impending deal, which remains incomplete as of now. Meanwhile, Beacon Default Management, overseeing the auction process, has announced that the auction scheduled for this month has been delayed until September. Experts in foreclosure proceedings note that postponements can occur if a settlement is reached with the borrower or if an alternative buyer is preferred by the lenders.
Monahan Pacific’s leadership, including Thomas Monahan and filmmaker Jonathan Parker, did not provide comments when contacted. Their website states the firm’s extensive portfolio consists of numerous properties across the Bay Area, which include an office building in San Francisco and a recently refurbished 140-room hotel located in San Rafael.
At street level, the ground floor of 149 New Montgomery Street is home to Cafe Madeleine, a French bakery owned by Bernard and Michelle Hong for nearly 25 years. Although their lease was set to expire this month, Bernard Hong mentioned they are currently negotiating a renewal to remain for an additional three to four years.
TMG Partners has operated within the Bay Area market for more than 40 years, developing and owning an impressive 30 million square feet in office, residential, and retail properties. Their recent transactions have been remarkable, exemplified by the recent sale of the 28-story office building at 300 Lakeside in Oakland to PG&E for over $900 million, effectively doubling TMG’s original investment from 2020.
As 2023 sees changes in TMG’s leadership dynamics with the elevation of junior executives’ roles, the firm has also been associated with high-stakes purchases of major retail spaces in San Francisco, specifically The Metreon and the Macy’s building located in Union Square.
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