Lone Star Funds, a private equity firm based in Dallas, is reportedly in advanced negotiations to purchase 600 California Street, a prominent 20-story office tower in San Francisco that was previously acquired by WeWork during its expansion phase. According to the Dallas Business Journal, while details about the transaction price remain undisclosed and the deal has not yet closed, Lone Star’s interest aligns with its recently raised $2.7 billion fund aimed at acquiring commercial properties under financial strain.
The firm currently manages approximately $95 billion in assets and has openly communicated its approach to targeting distressed office buildings. Recent acquisitions include a major downtown Denver property for $132.5 million and a partnership purchase of Fort Lauderdale’s Bank of America Plaza for $221 million.
“Most transactions we see and expect are from the banks facing pressure to de-lever their books,” said Jerome Foulon, Lone Star’s global head of commercial real estate, in an interview with Private Equity Real Estate when discussing the closing of their latest fund. “A lot of investors have recognized this is a Lone Star kind of market.”
The history of 600 California reflects broader challenges in San Francisco’s office sector. In 2019, WeWork partnered with Rhone Advisors to buy the 359,880-square-foot building for about $323 million—just under $900 per square foot—betting on combining WeWork leases with property ownership. The onset of the pandemic sharply reduced demand for offices and significantly lowered valuations.
By spring 2023, the owners had defaulted on a $240 million loan tied to the property. Lenders responded by suing for foreclosure and appointing Trigild as receiver in November 2023 while pausing foreclosure proceedings to test market interest. Newmark was brought on board this September to market the building. Current appraisals value it at roughly $109 million—a third of its price six years ago.
WeWork once occupied more than half of 600 California but renegotiated its lease down to around 43,000 square feet after bankruptcy proceedings last year.
San Francisco continues to face high vacancy rates among office properties; JLL advertised over 270,000 square feet available at 600 California as recently as August, indicating that about three-quarters of the building remains unoccupied.
