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Paramount in talks for Blackstone's San Francisco towers; landlord sues WeWork

Commercial real estate

* Paramount Group Inc. is in discussions to buy the Market Center in San Francisco's Financial District for roughly $723 million from Blackstone Group Inc., the San Francisco Business Times reported, citing three sources familiar with the discussions. The property comprises two office towers totaling roughly 762,000 square feet.

Blackstone paid $510 million for the towers in 2016, the report noted, citing property records. The building at 555 Market St. rises 21 stories, and 575 Market St. is 40 stories tall.

Paramount also has a roughly $408 million deal underway to buy the 55 Second St. office property in San Francisco.

* Belvedere Management Co. is suing to get out of a lease with WeWork Cos. Inc. at its 21-33 Irving Place building in Manhattan, N.Y., The Real Deal reported. In the lawsuit filed in New York State Supreme Court, the landlord said it originally signed a lease for multiple floors with a special purpose entity in 2016 and was given a guarantee that its holding company was worth more than $150 million.

The landlord said it received a notice in June that the holding company underwent a reorganization and that a newly created entity called WeWork Cos. LLC would now back the lease. Belvedere alleges that it has no proof that the new holding company's net worth is at least $150 million. The landlord also cited recent media reports after IPO-hopeful WeWork's S-1 disclosure that have "cast great doubt" on its financial viability.

A WeWork spokesperson denied the suit's accusations and said the corporate reorganization had no material effect on its guarantees to landlords, according to the report.

* The Wall Street Journal featured a comparison of WeWork with Switzerland-based rival IWG PLC, which has a similar business model and had a total of 602,535 desks as of June 30, compared with WeWork's 604,000. WeWork is privately valued at $47 billion despite logging big losses, while IWG has a market cap of roughly $4.45 billion and has been reporting profits for years, the publication noted.

* Developer Rabsky Group received a more than $200 million refinancing package from Berkadia Commercial Mortgage for its 500-unit residential property at 10 Montieth St. on the Rheingold Brewery site in Brooklyn, N.Y.'s Bushwick neighborhood, The Real Deal reported, citing property records filed with the city.

* The University of Maryland has leased 8,000 square feet from JBG Smith Properties to open a Discovery Center at 241 18th St. South in Arlington, Va.'s Crystal City neighborhood, the Washington Business Journal reported. The university is looking to tap into the area's rising innovation culture as Amazon.com Inc. establishes its second headquarters.

* Citing Ten-X Commercial's Summer 2019 Office Market Outlook, the Denver Business Journal reported that Denver's office market is expected to see rent declines and increases in vacancies through 2022. The top five "sell" markets were Nashville; Dallas; Austin, Texas; Denver; and Chicago.

Denver is expected to log a 19% vacancy rate in 2022 and see office rents decline 3.3% through 2022. Citing Ten-X quantitative strategist Chris Muoio, the report noted that the predictions account for a potential economic downturn.

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, Hang Seng rose 0.15% to 26,270.04, while the Nikkei 225 dropped 0.28% to 20,618.57.

In Europe, around midday, the FTSE 100 climbed 1.08% to 7,202.23, and the Euronext 100 rose 1.30% to 1,051.79.

On the macro front

The existing home sales consensus and EIA petroleum status report are due out today.

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