A joint venture between WeWork and Rhone Group has defaulted on its mortgage on an office tower in San Francisco’s Financial District.

The company, created by the coworking and private equity firms, both based in New York, defaulted on a $240 million loan for the 20-story building at 600 California Street. Bloomberg reports.

The property owned by funds managed by a venture educated by WeWork and Rhone in 2019 to purchase and oversee properties, including WeWork coworking offices as anchor tenants

Rhone and WeWork Capital Advisors spokesmen declined to comment to Bloomberg.

Default values ​​for office real estate are beginning to accumulate Landlord including Pacific Investment Management’s Columbia Property Trust, are struggling with rising interest rates and seeking negotiations with lenders.

San Francisco, where office vacancies have risen to almost 33 percenthas been tense how tech companies are shedding jobs and reduce or eliminate Offices.

WeWork, the coworking company co-founded by Adam Neumann, reached The company finalized a deal last month for a major restructuring to reduce debt and secure more capital commitments, according to Bloomberg.

Under its new CEO Sandeep Mathrani, the company cut spending as it continues to try to make a profit.

Office real estate defaults are hurting lenders, including billionaire investor Warren Buffett warning this week on upcoming problems at banks involved in commercial real estate. The largest US banks begin releasing first-quarter results this week.

In 2019, WeWork had 25,000 members 26 locations in the Bay Areamore than big office at Bishop Ranch in San Ramon, according to the San Francisco Business Times.

Late last month, Vornado Realty Trust and The Trump Organization asked for an extension of her loan for a 52-story office tower at 555 California Street after being placed on a service watch list. Your mortgage debt is $1.2 billion.

At the same time, WeWork reported this halve its net losses last year too $2.3 billion from the previous year.

– Dana Bartholomew

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