Starwood, Artisan Default on El Segundo Office Loan

Starwood Capital and Artisan Ventures are on the brink of losing a 257,000-square-foot office building in El Segundo, The Real Deal has learned. 

The firms have defaulted on an $84.8 million loan from MetLife Investment Management tied to the property, located at 1960 East Grand Avenue, according to a notice of default filed with L.A. County last month. 

Starwood and Artisan, formerly known as Artisan Realty Advisors, is $960,800 behind on the loan, as of Jan. 25. Neither company responded to requests for comment. 

The duo failed to “cure a covenant breach” and failed to pay default interest, among other things, all of which triggered a default. 

MetLife provided the loan in 2020, records show, to finance Starwood and Artisan’s acquisition of the building and a neighboring parking lot for $133 million. The firms bought the property from Brookfield. 

In 2022, Artisan and Starwood planned to redevelop the parking lot into 94,000 square feet of office space and a four-level parking structure, according to documents filed with the city of El Segundo’s planning department. The plans, however, were only in the beginning stages. 

About 70 percent of 1960 East Grand Avenue is leased, according to online listings for the property. 

The default comes after reports that Starwood and Artisan are in talks with another lender, Morgan Stanley, over $500 million in debt tied to the Pacific Coast Tower next door. 

The companies are still in negotiations to extend or forgive the debt, to avoid default, according to sources familiar with the matter, given the office complexes are struggling with occupancy issues.