Key Points:
- Affinius Capital is negotiating the sale of debt linked to Juul’s 123 Mission Street office building.
- Madison Capital may acquire the property if the debt is classified as non-performing.
- Juul bought the 29-story building in 2019 for $397 million but moved its headquarters to Washington, D.C. in 2020.
- Previous sale attempts with PGIM and PIMCO fell through; the new deal may come at a discounted valuation.
According to the San Francisco Business Times, real estate investment firm Affinius Capital is planning to sell the loan associated with Juul Labs’ headquarters at 123 Mission Street in San Francisco. U.S. private equity and real estate firm Madison Capital is reportedly the leading contender to purchase the debt. If the transaction goes through, the 29-story tower could change hands six years after Juul acquired it.
Sources say the deal has not yet been finalized. Should the debt be deemed non-performing, Madison Capital could take ownership of the property through foreclosure or a negotiated transfer.
Juul purchased the 387,000-square-foot building in June 2019 for $397 million to accommodate its expanding workforce. However, the company’s valuation fell sharply following heightened regulatory scrutiny of its vaping products, prompting significant staff reductions.
In May 2020, Juul announced the relocation of its headquarters to Washington, D.C. and listed the San Francisco property for sale. Multiple sale attempts, including deals with PGIM and PIMCO, collapsed that year. Madison Capital, which had previously partnered with PGIM in a bid for the building, may now pursue the property again—likely at a discounted price from the pre-pandemic valuation of roughly $1,100 per square foot, or about $400 million.
Affinius Capital (formerly Square Mile Capital) provided a $220 million loan for Juul’s original purchase of the property. The firm has since scaled back its San Francisco holdings, selling One Montgomery and acquiring debt on 600 Battery Street.
Juul’s efforts to lease out portions of the Mission Street tower have also failed to gain traction.
