Former WeWork Office Building in San Francisco Sells

Seven Equity Group, a New York-based investor that has been snapping up distressed San Francisco office properties, added another discounted asset to its growing portfolio with a former WeWork building that spent years in financial limbo after the coworking giant pulled out.

Seven Equity Group acquired the roughly 50,000-square-foot office building at 25 Taylor Street in the Tenderloin out of receivership for nearly $6.8 million, the San Francisco Business Times reported. The property bordering Mid-Market and Tenderloin is connected to the Golden Gate Theatre, which is owned by a separate entity and is not for sale.

The deal marks another bet on San Francisco’s recovering office market, where investors have been able to buy properties at steep discounts following years of declining values and elevated vacancies. The building’s troubles started after former owner War Horse Cities converted it into a WeWork in 2013. The co-working company occupied nearly the entire property under a 42,565-square-foot lease for close to a decade before vacating in 2021, leaving the landlord with an almost entirely empty building during the depths of the pandemic-era office downturn.

War Horse Cities was unable to replace the tenant and later sued WeWork for more than $11 million, alleging breach of lease and guarantee. The lawsuit was ultimately dismissed.

The property’s $18.5 million loan fell into default in 2021 before transferring to special servicing in 2023 with an outstanding balance of $16.9 million. A court appointed a receiver later that year, paving the way for the sale.

The acquisition continues Seven Equity’s push into distressed San Francisco office assets. The firm paid roughly $15 million last year for the 93,000-square-foot office building at 731 Market Street, a fraction of the $65.5 million that Jamestown LP paid for the property in 2015. Seven Equity also owns the 115,000-square-foot office building at 420 Taylor Street, which houses Nextdoor’s headquarters.

— Chris Malone Méndez