San Antonio's River Walk, a riverside promenade that draws millions of tourists annually, traces its history to the Depression. The 3.2-mile strip of hotels, restaurants, stores and office buildings got its start in the 1930s when the Works Progress Administration began to add walkways, dams and bridges to beautify the city and control flooding on the San Antonio River.

Now, River Walk has one of the city's most prominent ties to the current economic collapse. One Riverwalk Place, an 18-story office building on the northern edge of the River Walk, has defaulted on its mortgage, has stopped paying some of its bills and faces foreclosure.

Details are scarce because Equastone LLC, the fund manager that acquired the property in 2006, isn't talking. But according to records at the Bexar County courthouse, a foreclosure auction of the property has been scheduled at least twice but a sale hasn't occurred and a number of contractors have filed claims against the property because bills are going unpaid. Foreclosure documents list Wells Fargo Bank NA as the trustee for the holders of commercial mortgage-backed securities on the property. Wells Fargo didn't comment.

CoStar Group Inc.

The 18-story One Riverwalk Place in San Antonio has defaulted on its mortgage, has stopped paying some of its bills and faces foreclosure.

The building was appraised for about $37 million just after it was purchased by a fund run by Equastone, which is based in San Diego, according to Realpoint LLC, a Horsham, Pa.-based real-estate-research firm. The building's owner last paid its monthly interest-only payment of $16,121 on a $14 million loan in November, according to Realpoint, which also says Equastone has been negotiating to extend the loan.

If a foreclosure occurs, One Riverwalk would become one of the largest multitenant office buildings to go back to a lender in San Antonio since the late 1980s, when commercial foreclosures spiked in the wake of the savings-and-loan crisis, says Ernest Brown IV, executive vice president and managing director at Grubb & Ellis in San Antonio. A handful of retail properties and residential complexes have been taken back by lenders in the San Antonio area, but Mr. Brown says few if any have occurred in the office sector.

The financial difficulties of One Riverwalk, one of the city's high-end office buildings, have caught some by surprise. "I've had a lot of buildings where I've worried about getting paid and Riverwalk was not one of them -- until now," said Larry Hicks, president of Commercial Surfaces Inc., who filed an affidavit on behalf of his company claiming a lien and seeking to be paid for $20,299 in work on flooring done in the building that was due in January.

The Equastone fund, which owns an 82% stake in the building, has typically aimed to buy troubled office buildings and reposition them. One Riverwalk has made some progress upgrading the building, which was about 55% vacant when Equastone acquired it. It is now only about 30% vacant, according to Gardner Peavy of Cambridge Realty Group Inc., the building's leasing agent. Mr. Peavy says Equastone also is working to renegotiate its financing and has made progress adding value to the building by upgrading the lobby and making other improvements that have attracted new tenants.

Part of One Riverwalk's problem is location. While the River Walk promenade is one of the region's most popular tourist destinations, the building is in the city's central business district, an area that has lost some tenants to the suburbs in recent years. Landlords in the city's core currently are bracing for the fallout from AT&T Inc.'s headquarters move to Dallas from San Antonio.

Also, the building is just north of the more densely developed core of the River Walk. Greg Gallaspy, executive director of a nonprofit group called the Paseo del Rio Association that promotes and supports the River Walk, says some developers have built buildings or purchased land along the further reaches of the river expecting the vibrant riverfront restaurants, hotels and visitors to quickly transform other stretches of the river.

"What a lot of people don't realize is the River Walk has taken 50 or 60 years to become what it is today," Mr. Gallaspy said. "It doesn't happen overnight."

Write to Maura Webber Sadovi at maura.sadovi@wsj.com

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