dailyloe.com – A notable San Francisco office tower failed to attract any bids at a public auction last week. The 20-story building at 600 California Street was once valued at over $320 million. The auction was held on a sidewalk near City Hall.
Dallas-based Lone Star Funds became the official owner of the property. The private equity group had paid roughly $130 million for the building’s distressed $240 million loan in January. It acquired the debt from original lender Goldman Sachs.
The building was pushed into receivership after its former anchor tenant stopped paying rent. WeWork, the flexible office space provider, ceased payments three years ago. The property’s decline is tied in part to WeWork’s troubles.
Lone Star formally took ownership through a foreclosure process. The group placed a credit bid of $216 million on the property. It used the debt it purchased at a discount to bid.
The auctioneer addressed a group of property hunters gathered around him. He asked if anyone was there for the biggest loan. No outside bidders showed up to the auction.
Outside bidders would have needed an immediate deposit and proof of funds. They would not have had the chance to conduct physical due diligence. The transaction felt like a casual curbside deal.
Lone Star declined to comment on the acquisition. The group took over the largely vacant tower for an estimated $361 per square foot. This followed a loan sale brokered earlier this year by real estate firm Newmark.
The building was appraised at $109 million in 2024. This represents a near 70% drop from its 2019 valuation. Some market participants pointed to the sale as evidence of market weakness.
They said the anticlimactic sale underscores continued weakness in the office market. It challenges claims of a full recovery in the sector. The auction wrapped up the spectacular unraveling of 600 California Street.
