A succession of defaults on towers has unfolded as demand for space drops in the downtown Los Angeles office market.
Brookfield Corp., one of the largest office owners in downtown Los Angeles, defaulted on $784 million worth of loans on two towers. According to a Feb. 10 SEC filing, the firm failed to pay a $465 million loan package for the Gas Company Tower at 555 W. 5th St. and $319 million in loans for 777 S. Figueroa St.
The loan on the 52-story Gas Company Tower was comprised of a $350 million mortgage loan, a $65 million mezzanine loan and a $50 million junior mezzanine loan. The 52-story tower at 777 S. Figueroa St. loan was made up of a $269 million mortgage and a $50 million mezzanine loan.
Those aren’t the only ones. In January, Oaktree foreclosed on Coretrust Capital Partners’ 48-story, 914,000-square foot tower 444 S. Flower St.
As reported by the Real Deal, Coretrust had purchased the building, at the time known as Citigroup Center, in 2016 for $336 million. It took out a $230 million loan from the Bank of China that year. Coretrust refinanced the property in 2018, securing a $64.7 million mezzanine loan from Oaktree as well as a $210 million senior loan from AIG. After missing the due date on its loan with Oaktree in 2021, Coretrust and Oaktree reached a forbearance agreement for Coretrust to pay by May 31 last year. When Coretrust missed its payment, Oaktree initiated the foreclosure.
‘Less desirable’
Brookfield and Coretrust did not return the Business Journal’s requests for comment.
And last year, the Broadway Trade Center at 801 S. Broadway was foreclosed upon as an affiliate of Starwood Capital, a lender on the property, acquired the building through a public foreclosure auction.
From an investment and lender perspective, the view of the downtown Los Angeles market is negative, according to Sean Fulp, vice chair and head of office capital markets at Colliers.
“There’s a lot of value deterioration that’s happened,” Fulp said….
Read the full article here
