Real estate developer Michael Shvo could stand to lose up to $180 million in rent if he loses a lawsuit with the current owners of the iconic Transamerica Pyramid building in San Francisco. Shvo had signed a deal with Aegon to buy the leasehold on the building for $650 million, entitling him to collect rent on the tenants who lease the building’s offices. However, Aegon claims that Shvo violated the terms of the agreement by not disclosing his business partners and has taken legal action to terminate the deal.
If Aegon is successful in its legal action and the deal is terminated, Shvo could lose out on several years’ worth of rental income from the Transamerica Pyramid building, which houses several major corporations. According to court filings, Shvo had anticipated collecting $180 million in rent over the course of the lease, which runs until 2044, giving him ample time to recoup his $650 million investment.
Shvo, who is known for his high-profile real estate deals in New York and Miami, has not commented on the lawsuit, but legal experts say he could argue that Aegon’s claims are unfounded and that he did not violate the terms of the agreement. However, the case could drag on for some time, potentially tying up the property and preventing Shvo from collecting rent in the meantime.
The Transamerica Pyramid is one of San Francisco’s most recognizable landmarks, standing 853 feet tall and serving as the headquarters of the Transamerica Corporation. The building was completed in 1972 and was the tallest skyscraper in San Francisco until it was surpassed by the Salesforce Tower in 2018.
The current owners of the building, a joint venture between Aegon and the San Francisco-based developer Jay Paul Company, acquired the leasehold in 2019 from the previous owner, which was also a joint venture involving Aegon. At the time, the $650 million deal was one of the largest ever for a single-asset real estate transaction.
Shvo’s attempt to buy the leasehold on the Transamerica Pyramid was seen by many as a vote of confidence in San Francisco’s commercial real estate market, which has been hit hard by the Covid-19 pandemic. The city has seen a wave of corporate relocations and downsizings in recent months, with several major companies, including Dropbox and Twitter, opting to let employees work from home permanently.
Despite the uncertainty caused by the pandemic, however, the Transamerica Pyramid building remains one of the most sought-after properties in San Francisco, with its prime location in the city’s financial district and its iconic architecture. If Aegon is successful in terminating Shvo’s lease, it is unclear what the future holds for the building, but it is likely to attract plenty of interest from other investors and developers.
