G
eorge Mersho, CEO of Shoe Palace, is poised to acquire a delinquent loan that would allow him to take control of the 284,750-square-foot office building at 353 Sacramento Street in San Francisco's Financial District. The deal involves Aareal Capital selling a non-performing loan tied to the 23-story tower for nearly $77 million. The lender is seeking $270 per square foot, or $76.9 million.

    The building has changed hands several times since its purchase by an affiliate of KBC Realty Advisors in 2016 for nearly $170 million. In 2021, Aareal acquired the loan from PCCP LLC, which had originated it for Pacific Oak Capital Markets and Migdal. If Mersho buys the loan, he could take ownership through foreclosure or a deed-in-lieu handoff.

    Pacific Oak's affiliate reported in an April regulatory filing that the building's fair market value was $98.8 million at the end of last year, or $347 per square foot. This would mean Mersho is buying the building for 22% less than its estimated value. The deal follows Mersho's previous investments in office buildings through his family office, Bridge Group Investments, which has invested over $400 million in retail, industrial, and multifamily properties since its founding in 2004.