Lenders Seek Foreclosure of WeWork Tower in San Francisco
The co-working firm has defaulted on $240 million loan for 600 California Street.
The lenders for a 20-story office tower in San Francisco owned by an affiliate of co-working space provider WeWork and Rhone Group are suing to foreclose on the Financial District property.
WeWork Capital Advisors (WeCap), an investment arm of the company that acquires stakes in buildings where WeWork leases space, and Rhone defaulted in April on a $240M loan for 600 California Street.
Goldman Sachs Bank USA loaned WeCap $140M in 2019 and Citi Real Estate funding provided $100M in financing. WeWork co-working offices are an anchor tenant in the building.
The foreclosure lawsuit was filed on behalf of Wells Fargo Bank, which is listed as a trustee for holders of the loan. According to a report in the San Francisco Business Times, an Australian financial services company, Computershare, acquired Wells Fargo’s corporate trust services business in 2021 and is acting as the agent for Wells Fargo as certificate administrator.
Torchlight Loan Services is the special servicer managing the loan default process.
While the lenders and the partners are said to be trying to renegotiate the terms of the loan, the lawsuit seeks to force payment of the debt and all costs associated with the foreclosure. The lawsuit also asks the court to appoint a receiver to handle the same of the property, the Business Times reported.
WeWork leases 186K SF at the 359K SF building but stopped paying rent in March and the loan was transferred to special servicing. The co-working firm’s lease at 600 California Street expires in 2025. WeCap paid $330M for 600 California Street in 2019.
Meanwhile, in Denver, the landlord at a newly constructed office building at 2420 17th St. is suing WeWork for stopping its rent payments in May for its co-working space in May, the Denver Business Journal reported.
According to the Journal, WeWork had leased about 65% of the building, known as The Lab.
When it formed the real estate venture with Rhone in 2019, NYC-based WeWork had 25K members across 26 Bay Area locations as well as a large office at the Bishop Ranch complex in San Ramon.
The joint venture aimed to acquire a $2.9B office portfolio after receiving a $1B equity infusion from Ivanhoe Cambridge, the real estate arm of Canadian pension fund Caisse of Quebec. According to a report in Bisnow, WeCap had $886M in assets under management in March.