Lone Star Funds, a private equity firm based in Dallas, is in advanced negotiations to acquire 600 California Street, a 20-story office tower in San Francisco that was previously associated with WeWork. The potential acquisition would mark Lone Star’s entry into the Bay Area’s distressed office market, according to a report from the Dallas Business Journal. Details on pricing have not been disclosed and the deal has not yet closed.
The move aligns with Lone Star’s recent $2.7 billion opportunistic fund raised in late 2024, which targets commercial properties under financial strain from lenders. The firm manages about $95 billion in assets and has recently acquired other major office buildings facing similar distress, including a downtown Denver tower for $132.5 million and Bank of America Plaza in Fort Lauderdale 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, when discussing the fund’s closing with Private Equity Real Estate. “A lot of investors have recognized this is a Lone Star kind of market.”
The history of 600 California Street reflects broader challenges in San Francisco’s office sector. In 2019, a joint venture between WeWork and Rhone Advisors purchased the 359,880-square-foot building for approximately $323 million—nearly $900 per square foot—based on a strategy combining WeWork leases with property ownership. However, after the pandemic reduced demand for office space and lowered valuations across the sector, the venture defaulted on its $240 million loan by spring 2023.
Following the default, lenders initiated legal action seeking foreclosure and appointment of a receiver. Trigild was appointed as receiver in November 2023 while foreclosure proceedings were paused to assess market interest. Newmark began marketing the property in September 2025. The building’s appraised value has since dropped to around $109 million, less than one-third of its purchase price six years earlier.
WeWork once occupied more than half of the tower but renegotiated its lease to reduce its footprint to about 43,000 square feet.
San Francisco continues to experience high levels of vacant office space. As of August 2025, JLL was advertising over 270,000 square feet available for lease at 600 California Street—indicating roughly three-quarters vacancy.
Lone Star Funds’ approach is part of a larger trend among investors targeting distressed commercial real estate assets across several U.S. markets.
