The 24-story 600 B Street office tower in downtown San Diego, previously home to the Union-Tribune, is in foreclosure.The owner of the 24-story office tower at 600 B Street in downtown San Diego is on the brink of losing the building as the lender seeks to recoup more than $83 million in unpaid debt.
“The storyline at 600 B Street is the same storyline for numerous office buildings in Los Angeles, San Francisco and other cities throughout the United States,” said Gordon Gerson, whose commercial real estate law firm, Gerson Law, represents financial institutions. “The buildings are not generating revenue through rents to service debt, and the equity in the property is so diminished that developers are just moving on and letting go of the properties.
The filing, which lists the total amount owed as $83.8 million, formally starts the foreclosure process and gives the borrower 90 days to get back into good standing before a notice of sale is published. “Sometimes it’s a little bit of a cat and mouse game depending on that relationship,” said Adams, who is based in Irvine. “No situation is really the same, but if the borrower is under water, where the loan is more than the building value, there’s no reason for the operator to stay in the deal because there’s no way to get their money back.”
WeWork, which exited bankruptcy last month, has long been the building’s largest tenant. In 2016, the coworking company originally leased six floors and 88,273 square feet of space. With its recent reorganization, WeWork is retaining its lease at 600 B Street, but it remains unclear how much space it will keep.The newspaper originally leased four floors as part of a 15-year rental agreement, but last year gave back two of those floors to the owner, as permitted under the lease.