Return to Lender: Week of April 23, 2026

600 California St., one of San Francisco’s notable office towers, failed to sell at auction, putting it into the hands of its debtholder, the San Francisco Chronicle reported. Within minutes of the auction beginning, Lone Star formally took ownership of 600 California through foreclosure at an estimated $361 per square foot.

A distressed loan tied to a stalled Garment District factory conversion has traded for roughly $15 million, a discount of about 85% on the loan’s payoff, putting the partially finished building at 335 W. 35th St., near Penn Station, back in play for opportunistic buyers. Empire Capital Holdings and the Hakimian Organization purchased the note for roughly $15 million, according to Bloomberg News.

The Memphis Business Journal reported that a California-based LLC acquired a four-building Class A office park before it went to foreclosure. California-based MBG Investment Holdings LLC acquired Lenox Office Park for $10.5 million in lieu of foreclosure. The seller was Lenox Park Memphis Realty LP, an affiliate of New York City-based investment management company Group RMC. The 392,000-square-foot campus features multiple four-story office buildings near Highway 385 at 3150 Lenox Park Blvd. and 6745, 6750, and 6775 Lenox Center Court.

Two more properties in Austin-based Rastegar Capital’s portfolio are headed to the auction block, including the West Austin office building that houses Rastegar’s headquarters, the Austin Business Journal reported. The two properties headed to foreclosure auction are a 1960s-era multifamily property at 5005 Manor Road and Rastegar’s headquarters at 515 S. Capital of Texas Highway. The auction will be held at the Travis County Courthouse on May 5. In December, four other Rastegar properties went to foreclosure auction, where the lender, New York-based Greystone, acquired them for $19.7 million.

Nearly three years after taking over an Austin developer’s operations, the receiver behind the financially challenged company is taking steps forward. Citing an April 14 receivership report, the Austin Business Journal said infill housing developer StoryBuilt’s receiver, Stapleton Group, is now prioritizing $3.78 million worth of clawback claims as it attempts to repossess an estimated $8.1 million of funds. Los Angeles-based Stapleton became the receiver of StoryBuilt’s operations and property in August 2023 as the company faced lawsuits from investors and condo owners and also laid off more than 100 employees

Another tower at Bloomington’s Normandale Lake Office Park is the subject of a foreclosure lawsuit, a suit that the Minneapolis/St. Paul Business Journal reported adds to a wave of distress across the five-building campus. In an April 16 lawsuit filed in Hennepin County District Court, WM Capital Partners alleges Liberty 8000 Normandale LLC and guarantor Avrohom Prager defaulted on $31.1 million in debt tied to the 8000 Tower within the office park. WM Capital Partners, an Austin-based firm that invests in commercial real estate debt, acquired the loan in March 2026 from Minnesota Bank & Trust. The loan originally carried a principal balance of up to $27.4 million, but because of interest the borrower owed $31.1 million as of April.

The securitized loan on Saint Louis Galleria ($230.5 million | Multiple Conduits | CMBX.12) transferred to special servicing after years of declining performance, Morningstar Credit reported. The most recently reported DSCR was just 1.03x with an 85% occupancy, but revenue has never reached the underwritten level throughout the entire loan term. In addition, Nordstrom, which was not part of the collateral, closed in 2025, leading to reduced foot traffic.

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