The prospective buyers of the shuttered San Francisco Centre mall have walked away from the pending deal to buy the downtown shopping center after months of due diligence, according to sources familiar with the talks, scuttling what had been poised to be one of San Francisco’s highest-profile commercial real estate sales in recent years.
The buyers, San Francisco-based developers Prado Group and Presidio Bay Ventures, confirmed their exit in a joint statement to the Chronicle on Wednesday: “After extensive diligence and thoughtful evaluation, we are not currently moving forward with the transaction,” the partners said, adding that they remain “strong believers in the long-term future of downtown San Francisco” and the long-struggling shopping center’s “pivotal importance to Market Street and the broader San Francisco downtown recovery that is underway.”
One source tracking the sale of the city’s fully vacant downtown mall reported the deal was killed, in part, after the developers failed to renegotiate an existing long-term lease held by the San Francisco Unified School District for a portion of the property. Another insider described the mall acquisition as a “high-risk” investment and said the developers potentially struggled to raise the necessary funding, pushing back against the notion that the school district’s ground lease was an issue.
A spokesperson for SFUSD, which owns a roughly 76,000-square-foot parcel of land beneath the 1.5-million-square-foot complex at 865 Market St. where a Nordstrom store once operated, did not offer immediate comment on the sale falling apart. The district leased the parcel for commercial development in the 1980s, via a contract that runs through 2043…