WeWork Capital Advisors and Rhone Group’s 600 California Street is now worth less than the debt the duo had on the 20-story office tower.
Appraisers have valued the 359,000-square-foot office building at $183 million, or about $509 a square foot, according to data from Trepp. That represents a 47 percent drop from its 2019 valuation of $349 million, or $972 a square foot.
The new appraisal comes after WeWork and Rhone defaulted on $240 million in loans tied to the property last year and lenders filed a lawsuit to foreclose and appoint a receiver on the building.
WeWork and Rhone defaulted on the $240 million in loans — $140 million originally from Goldman Sachs and $100 million from Citi, then packaged into commercial mortgage-backed securities deals — after WeWork itself stopped paying rent at the property.
WeWork had leased 186,000 square feet of the building, roughly 52 percent, but stopped paying rent in March 2023.
After the CMBS bondholders filed their lawsuit, the court appointed Trigild as a receiver on the property.
Trigild is currently working on “stabilizing operations” at the building, according to Trepp, citing special servicer comments, by trying to “aggressively market the vacancy,” alongside leasing agent JLL.
The lenders “will continue to explore enforcement options on the WeWork lease.”
WeWork, which is making its way through Chapter 11 bankruptcy proceedings, owns the majority stake in the general partner of WeWork Capital Advisors, also known as WeCap according to filings with the U.S. Securities and Exchange Commission. The strategy of WeCap was to invest in office buildings where WeWork would operate as an anchor tenant.
Last month, WeWork Capital Advisors lost control of an office building in London to receivership, after trying to sell the property for two years, according to Bloomberg.