Sixth and Guadalupe refinancing supports ground lease buyout
A mixed-use skyscraper in Austin, Texas, with office space fully leased to Meta, the parent company of Facebook, is undergoing refinancing as part of a transaction that will allow the developer to buy out the ground lease beneath the property.
The 66-story Sixth and Guadalupe tower, completed in 2024 in downtown Austin, includes office, residential, and retail components. The $265 million refinancing covers the office and retail portions of the building, which are fully leased, according to a Morningstar Credit presale report.
Meta preleased the entire office portion in 2021 while the project was still under development by a joint venture between Lincoln Property Co., DivcoWest, and Kairoi Residential. However, the company never occupied the 589,112 square feet of office space spanning floors 14 through 32 and began marketing most of it for sublease in 2022. Despite this, Meta has continued to pay rent on the full space since May 2024.
So far, Meta has subleased the top two floors totaling 63,057 square feet to PwC and Weaver. The remaining office space is largely unfinished in shell condition, according to analysts. Meta’s lease runs through December 2036 and does not include termination options.
In addition to this tower, Meta leases another 549,090 square feet of office space across Austin, with those agreements set to expire between 2026 and 2029.
The refinancing loan, expected to close around April 17, includes a $55 million reserve designated for tenant improvements tied to Meta’s space. The ownership group also plans to use proceeds from the loan—backed by Wells Fargo Bank and Goldman Sachs Mortgage Co.—to fund a $74 million ground lease buyout from Ramrock Real Estate.
Market analysts note that declining land values in Austin present a favorable opportunity for such a buyout at a discounted price.
Beyond the office component, the 2.2 million-square-foot tower includes 9,657 square feet of ground-floor retail space. The retail area is leased to The Kitchen Austin, an upscale dining concept co-founded by Kimbal Musk, and Black Sheep Coffee.
The office and retail portions of the tower, valued at approximately $450 million, are being used as collateral for a commercial mortgage-backed security. Meanwhile, the ownership group is preparing to sell the 348-unit residential portion separately. The apartment component currently has a vacancy rate of about 10%, according to CoStar data.
Although Sixth and Guadalupe is currently the tallest building in Austin, it is expected to be surpassed by The Waterline, a 74-story mixed-use development scheduled for completion later this year.
Austin’s office market continues to face challenges, with vacancy rates at a historic high of around 16% due to an oversupply of new space following a major development cycle. Analysts note that many large technology companies in the city are either reducing or maintaining their current space requirements rather than expanding.
Source: Original reporting by Candace Carlisle, CoStar News.
