Tag: Los Angeles commercial real estate news

Santa Monica-based Macerich has joined the parade of REITs selling off real estate, with the retail specialist dumping more than a billion dollars worth of property in the last year and a half.

And it isn’t through.

Macerich is now under contract to offload a mall in coastal Santa Barbara, which should close next quarter and command an $11 million price tag, the company said during a fourth-quarter and full-year earnings call, when chief executive Jack Hsieh touted the “path forward plan” he introduced two years ago when he snagged the corner office and set out to pay down debt. 

Macerich sold a sprawling shopping center in the Long Beach suburb of Lakewood for $332 million, last year — a deal that included the buyer’s assumption of a $317 million loan, which was set to mature soon. That was an improvement from a year earlier, when the company surrendered its hometown Santa Monica Place mall to lenders after defaulting on a $300 million loan.

Macerich isn’t the only REIT in the L.A. area offloading real estate. Rexford’s recent earnings call included words on the industrial specialist’s plans to dispose of $400 million to $500 million of assets this year (it had already peddled seven properties for a total of $217.5 million in 2025). Kilroy, similarly, said it would continue to dispose of non-core real estate during its call after selling offices in Santa Monica, Hollywood and San Diego. 

Victor Coleman’s Hudson Pacific Properties is next to report earnings, so stay tuned. Hudson Pac’s losses have been ballooning amid office and studio pain. It’s been sorting out its portfolio, too — in December it sold a Los Angeles office campus to its tenant at a price that allowed it to pay off the commercial mortgage-backed securities debt connected to the property. 

On retainer 

One California Plaza — the Bunker Hill office tower that Rising Realty Partners and DigitalBridge own but lost to a receiver after a $300 million default amid downtown Los Angeles’ distress — still brings Chris Rising’s outfit some revenue. 

Receiver Trigild kept Rising Realty on to manage the million-square-foot tower downtown days after it was appointed by the court in late August. The latest receiver report notes Rising Realty Partners’ third-party property management business was paid $265,000 via a management fee for the five months ended December. JLL, responsible for leasing, made $90,000 during the same period, part of the tower’s total operating expenses, which amounted to almost $9 million.

Rising said he pitched the business at a discounted rate and because his team has a relationship with tenants. That’s good for bond holders and good for the receiver, who wants continuity, he said.

JLL, Trigild and an attorney for the receiver did not immediately respond to a request for comment. 

Half price

The price of TruAmerica’s recent Luxe Villas and Haven Apartments purchase was previously undisclosed. The mystery is half-solved. Luxe Villas located in Brentwood traded for about $50 million, or more than $800,000 per unit. That covers the refinancing loan Gortikov Capital landed two years ago for the 60-unit property. How much Cityview sold its 97 units, called the Haven Apartments, in Culver City to TruAmerica is still unknown … for now. IPA’s Kevin Green, Joseph Grabiec and Gregory Harris brokered the deals.

More pain

Los Angeles’ office and hotel distress persists, whether it be Jade Enterprises’ loan backing Sawtelle offices landing in special servicing, or Grant King handing back the keys to a Hollywood hotel — his last in Tinseltown, where he dreamed of developing a mini-hotel empire. 

The commercial mortgage-backed securities debt on the office building at 1950 Sawtelle Boulevard in West Los Angeles’ Sawtelle Japantown neighborhood went to special servicing after the borrower failed to pay it off at its January maturity date. The three-story, 100,000-square-foot, red-brick building was only 43 percent occupied last summer after its largest tenant reduced its space and another left.

Lender LCP Group snatched the trendy Dream Hollywood Hotel at 6417 Selma Avenue via a deed in lieu of foreclosure signed by King. He lost his other two Hollywood hotels, the Tommie and Thompson, to lenders, three years ago. 

Read more

Relevant’s Grant King hands back keys to Hollywood hotel

$37M Sawtelle Japantown office loan lands in special servicing

Rising Realty-owned tower in receivership after $300M default

Parking lots can be the most vanilla of commercial real estate assets, but they can be spicy when they’re at the center of a complaint about an alleged conspiracy.

Criscione Meyer Entitlement, which owns six downtown Los Angeles surface parking lots that total about 69,000 square feet, has sued three parking entities — all of which appear to be sister companies connected to Richard Ulemann Sr. —  over a loan dispute involving said lots near L.A. Live off the 110 Freeway, and have entitlements for redevelopment as affordable residential.

Here are the twists and turns:

Plaintiff Criscione Meyer Entitlement (CME) purchased the six parcels from defendant 110 West Properties out of bankruptcy for $22 million five years ago. The purchase price was paid via a loan obtained by CME in the amount of $10 million and secured by a deed of trust. The remaining $12 million was paid via a promissory note payable to the seller, 110 West, and secured by a second deed of trust. Then, CME became a landlord to 110 West, and later to defendants Shamrock Parking and Classic Parking, which the complaint calls “co-conspirators” and “alter egos” of Ulemann.

Some time passed, some extensions on the debt was granted, and CME eventually negotiated a deal to pay off that $12 million loan for just $500,000, per the complaint. CME claims 110 West accepted the $500,000 payoff in writing but then sold its $12 million note on the property to Classic Parking. Classic Parking then refused to honor the $500,000 payoff agreement.

CME alleges this was a breach of contract and part of a coordinated effort to block the refinancing of five parcels and a sale of one to an electric vehicle fast charging company for about $11 million. (CME accused the lessees and defendants of illegally occupying the space because their lease is up and they owe rent, too).

“Each of them, knowingly and willfully conspired and agreed to cause financial hardship to CME by inducing 110 West to breach its discounted payoff agreement with CME and instead assign the $12 million note to Classic Parking,” the complaint reads. “Defendants, and each of them, furthered the conspiracy and lent aid and encouragement by directing 110 West to repudiate the discounted payoff agreement with CME and instead sell the $12 million note to Classic, thereby aiding and abetting the tortious interference with CME’s contractual rights.”

The complaint continues: “The conduct of defendants in conspiring was, and is, fraudulent, oppressive and malicious.” 

CME wants the court to force defendants to accept $500,000 and release the $12 million deed of trust, keep them from foreclosing while the case is pending and evict them. It also is seeking $5 million in damages.

The attorney for the plaintiff and a representative for the three related parking entities did not immediately respond to a request for comment.

What we know beyond the litigation is that CME has been trying to sell the parking lots for years. The real estate came on the market in Aug. 2023 with an ask of $23 million. A source familiar with the matter said the parcels will trade for less. 

One of the parcels is in contract and the others are in negotiations, per Patrick Sharples, a broker with Keller Williams via G&S Group, who holds the offering. They could all close later this year, but it’s unclear whether litigation will influence an outcome. 

The real estate can be redeveloped and, because they’re near L.A. Live, there’s potential for apartments or a hotel. But neither pencil out, according to Sharples. He said he has talked with developers because the parcels are eligible for ED1, an emergency order by Mayor Karen Bass that streamlines the approval process for developments that are 100 percent deed-restricted affordable housing. The numbers didn’t make sense, he said. When it comes to a hotel, the lots aren’t zoned for that, so nothing would be completed before the World Cup or Olympics. 

That doesn’t mean the lots won’t eventually be redeveloped, but they may stay just parking lots for a bit. 

Hamlet-esque 

Oceanwide Plaza creditors are having their “to be or not to be” moment. After a federal bankruptcy judge greenlit a settlement ending a lender-versus-lender war, creditors have a choice: Make their own or joint credit bids and attempt to complete the stalled mega-development or sell it off in hopes of recouping their losses, a person with knowledge of the matter told The Real Deal. That decision is imminent, the source said. LA Downtown Investment, funded via EB-5 investors, and Lendlease, the one-time general contractor, are the two major parties. We’ll see if they persist or ditch. 

Kilroy trims exposure

Kilroy Realty reported earnings earlier this week, and a lot of chatter was about a big buy and sale in San Diego, but let’s take a look at Los Angeles. Chief Executive Angela Aman, on the fourth-quarter earnings call, said Los Angeles is where the real estate investment trust has completed most of its portfolio modification after selling 501 Santa Monica and Sunset Media Center in the heart of Hollywood, and buying Maple Plaza in Beverly Hills, which is still one of her best talking points to date. Going forward, however, expect more action as it rejiggers in L.A., where Kilroy still is facing a little more than 400,000 square feet in lease expiration this year.

Read more

Parking lots near Crypto.com Arena in DTLA list for $27M 

Kilroy buys San Diego campus for $192M, dumps another for $125M

Will Oceanwide Plaza creditors take a shot or pass on downtown eyesore?

Laura Clark has led earnings calls before but Thursday’s was her first as incoming chief executive of Rexford Industrial. The call began with a pre-recorded personal note from co-founders and co-CEOs Michael Frankel and Howard Schwimmer, who were not on the call. Clark thanked the founders, who she’ll soon replace in the Elliott era, but made it clear Rexford’s next chapter has begun. 

Earnings were mixed. The real estate investment trust reported losses in the fourth quarter but was still profitable for all of 2025. It blamed losses on sell-offs of several properties along with co-CEO transition costs–and we know Frankel and Schwimmer were granted stock awards valued at more than $20 million each. The big payouts made it all the more notable that Clark, on the call, mentioned Rexford was realigning executive compensation with shareholders’ expectations. 

The latest proxy shows that Frankel and Schwimmer raked in $13 million in total compensation in 2024, with base salaries of $1 million. Clark’s base will be $850,000, per a recent Securities and Exchange Commission filing, and her annual cash incentive opportunities are 25 percent below her predecessors.

Elliott’s hand in the departures and changes going forward seem clear, including a strategic imperative that has Rexford disposing of real estate and buying back shares. One analyst said he understood Clark was new to the corner office but bluntly asked what if the new strategy isn’t successful? Clark plowed through the question, giving shareholder returns top priority and expressing confidence that the new pattern of capital allocation would deliver long-term value. 

Benefactors

The race for California’s next governor is on, but there is still no clear frontrunner. 

There are two candidates we are keeping a close eye on because of their backers. The first is ex-Fox News host and Republican hopeful Steve Hilton, who received a contribution from billionaire Los Angeles apartment developer Geoff Palmer. Palmer, a Trump donor, gave the maximum. 

The second is San Jose Mayor Matt Mahan, who got an endorsement from another L.A. billionaire developer — Rick Caruso, who purportedly considered a run of his own. Mahan, a late entry, hasn’t hit a filing period on campaign finances yet, but he could get more than verbal support from Caruso in the coming months. 

Delivered 

Cityview helmed by Sean Burton completed its eight-story, 265-unit community located in Los Angeles’ South Bay, at 12888 Crenshaw Boulevard, near SpaceX headquarters — a deal Burton previously told the publication he could not do in the City of Los Angeles because of the so-called mansion tax. Despite its moniker, Measure ULA hits commercial deals, too, with a 4 percent levy on trades of more than $5 million, and 5.5 percent on those priced at more than $10 million. 

And that wasn’t the only completion announced this week … 

Fort Lauderdale-based BH3 Management launched sales at Privé Malibu, a gated-community of 68 condominiums in the Point Dume neighborhood (on 10 acres at 6487 Cavalleri Road), minutes from the beach. It happens to be the first for-sale luxe product to hit Malibu in two decades. Prices start at $2 million. But don’t worry, most condos have ocean views. 

Another selling point for the ultra-rich? Charlie Sheen might be your neighbor! The actor is a long-time resident, and is considering purchasing a Privé  Malibu pad, per a spokesperson for the developer. 

Price tag

Los Angeles–based real estate investment company JRK recently purchased a $400-million, three-property portfolio from Equity Residential. The deal includes 803 apartments spread over properties in Seattle, Hoboken, New Jersey and the City of Angels. 

How much JRK paid for the 94-unit complex at 12301 West Pico Boulevard in West Los Angeles’ Sawtelle neighborhood was unclear when announced but the price has since come clear: $38 million, according to property records signed by both Equity Residential’s Caroline Hammond and JRK’s Daniel Lippman. That comes out to around $400,000 per unit. The trade was in Measure ULA’s reach, so the city tax amounted to more than $2 million. 

Read more

Rexford reports millions in quarterly losses in wake of Elliott stake

Billionaire developer Geoff Palmer backs GOP governor hopeful Steve Hilton 

Some of the usual suspects of the Southern California commercial real estate crowd chatted over breakfast burritos and coffee at a Hilton hotel in Little Tokyo on Wednesday, perhaps  in hopes of getting some deals done in what panelists would later describe as another hard year. 

Three chief executives of family-owned businesses, among others, sat on the panel at Bisnow’s first Los Angeles event of the year: Nadine Watt of Watt Capital Partners, Mike Lowe of Lowe Enterprise, and Christopher Rising of Rising Realty Partners.

All three said this year won’t be easy, with no white knight to save the day, or downtown. Institutional capital, even if it hasn’t written off Los Angeles, is in wait-and-see mode, Lowe said. 

Rising was a hit for his mix of humor and straight talk.

“At our height we were the second largest landlord behind Brookfield in downtown L.A., and we’re still around — they’re not,” Rising said, alluding to his efforts to hold on to One California Plaza as opposed to the hundreds of millions of dollars worth of downtown office towers Brookfield has defaulted upon in an exit being made mostly via lenders or receivers.Brookfield has multiple offerings throughout downtown’s Financial District that account for about a fifth of Class A office space.

That elicited some laughs, but Rising then commanded attention with a serious assessment of current events. The son of the late Nelson Rising, who was very involved in California politics, said “there is a broken trust with Wall Street,” and it stems from Measure ULA. That’s the City of Los Angeles’ property-transfer tax that’s also known as the mansion tax despite the fact that it hits the commercial as well as residential sectors with a 4 percent levy on deals of more than $5 million, and 5.5 percent on deals priced at more than $10 million.  

Wall Street believes elected officials specifically went after corporate profit, Rising said, with Measure ULA, which drew rumbings of reform this week before being kicked to committee by the city council.

“We’ve got to rebuild trust,” Rising said. “I would like to see our mayor and our city council get on an airplane and go down where all the private equity firms are and say, ‘we’re open for business’ … I don’t think that will happen … I’d be happy to … make introductions.”

Back to back to work

Rising, who co-owns One California Plaza, the office tower on Bunker Hill that’s now in the hands of a receiver after a $300 million default, wants workers back at their desks, particularly government employees downtown. He shared a conversation he said he had with Mayor Karen Bass a couple years ago, where he asked her what it would take to get people back in the office. Her response, he said, was that her staff comes in but she can’t force other city personnel to do so.  

Rising called the mayor’s response “inappropriate,” and that he told her she could change department heads, but she wouldn’t.

His goal wasn’t to attack her but something’s gotta give. “Our elected officials are so hostile to the business environment,” he said. 

New money meets old

David and Daniel Mirharooni purchased a pair of adjacent properties in Beverly Hills’ Golden Triangle for about $25 million, or around $1,500 per square foot, from Anderson Real Estate, founded by late billionaire and Los Angeles businessman John Anderson, whose name adorns the business school at the UCLA. Newmark’s Jay Luchs and Gavin Ketchum brokered the off-market transaction.

The deal was for 202 North Canon Drive, a one-story home to Rodeo Realty, and 208 North Canon Drive, which can be used for office or retail — the two buildings amount to about 16,400 square feet. 

It’s a pricey trade, and a notable one. The Mirharoonis have made other Beverly Hills buys, where commercial deals are untouched by the mansion tax. They own a Mastro’s on Canon, and recently purchased retail on South Robertson Boulevard for almost $8 million, or $985 per square foot. But why did Anderson sell? It still owns 9720 Wilshire, a stunning office tower in Beverly Hills’ Golden Triangle.

Knockout 

Olympic gold medalist and 10-time world champion boxer Oscar De La Hoya defaulted on a $27 million commercial mortgage-backed securities loan connected to an office building at 626 Wilshire Boulevard in the Financial District of downtown LA.  The “Golden Boy” looks tarnished on this deal, with about $23 million in date and foreclosure looming.

Eyesore no more? 

Creditors reached a bankruptcy-exit agreement over Oceanwide Plaza downtown, according to Bloomberg. That clears the way for a possible sale of the undone towers covered in graffiti. A potential investor is in talks to buy the property, but the deal hinges on resolving the bankruptcy, Bloomberg reported, citing people with knowledge of the matter. 

Read more

“Offensive”: Measure ULA oversight committee lashes out at Raman’s bid for exemptions

Golden Triangle properties fetch $1,500 psf

Oscar De La Hoya defaults on downtown office loan, faces foreclosure

The Real Deal wrote about two deals this week that tell different but somewhat similar stories about Los Angeles’ office world: one downtown and another in Silicon Beach.

The latter, a creative office building in Venice, occupied by technology giant Google and designed by the late Frank Gehry, traded for $39.6 million, or about $500 per square foot. The other, an office tower on Bunker Hill, owned by Brookfield, which has defaulted on more than $500 million of debt tied to the property, could trade for $180 million, or about $130 a square foot, if and when a deal that’s currently in the works closes. 

There is an obvious difference between downtown and Silicon Beach, not to mention Google and Brookfield. Those are chief among various reasons that one traded for $500 per square foot and the other isn’t close to the $200-per-square foot-mark.

Downtown L.A.’s office market continues to have serious problems — deep enough to raise questions about its future as a commercial hub. It’s been bumping along the bottom for enough time to render a bargain price being bandied about for a Class A tower on Bunker HIll is no surprise.

The $500-per-square-foot for the iconic Binoculars Building does give pause, however, as a reminder that Southern California is still working out its new normal. Industry players estimate the property probably would have traded for $1,000 per square foot before the pandemic, and its current price reveals a reset through the lens of (pun intended) one of the best-known creative office spaces in once desirable areas such as Silicon Beach. 

Back in downtown, commercial giant Brookfield, mostly via lenders or receivers, still has other office tower offerings throughout downtown’s Financial District that accounts for about a fifth of Class A office space. Keep an eye on that lineup as it sells off in deals that could set a firm bottom for the market.

Meanwhile, here’s a recap of key details on the recent trade in Silicon Beach and pending deal on Bunker Hill.

• Silicon Beach trade: The Luzzatto Company purchased the three-story, 79,000-square-foot property at 340 Main Street, where a pair of 45-foot-tall binoculars stands, from a W.P. Carey spin-off. Luzzatto received a $24 million loan. The city transfer tax, which includes a special tax via Measure ULA, amounted to more than $2 million.
• Downtown deal talk: 601W is in talks to purchase the mortgage loan on 333 South Grand Avenue, which encompasses Wells Fargo Center — North Tower and the retail spot connected to it, owned by Brookfield, for $180 million, knowledgeable sources said. The deal has not closed, according to an informed source. It appears to be lender-facilitated, and the buyer could then do a deed in lieu of foreclosure. 

Some studio solace

Hudson Pacific Properties, Vornado Realty Trust and Blackstone — AKA the joint venture partners behind just-opened Sunset Pier 94 Studios — recently announced a paramount tenant … literally. Paramount Television Studios leased 70,000 square feet to film the second season of Dexter: Resurrection. That’s 30 percent of the 232,000 square feet of leasable stages, production support space and offices. A strong start for the new space, and relative boom compared with Blackstone and Hudson Pacific Properties’ Sunset Glenoaks, which is only 8 percent leased, and was deconsolidated by Victor Coleman’s Los Angeles-based real estate investment trust.

Separately, an $87 million commercial mortgage-backed securities loan secured by an office building in Burbank and owned by Blackstone and Worthe Real Estate Group moved to special servicing for imminent monetary default, Bisnow reported, citing Morningstar data. Its sole tenant, Warner Bros., vacated and it has sat empty since.

Fly away

The $45 million debt on a Marriott-branded hotel, a half a mile away from LAX’s entrance, moved to special servicing for imminent monetary default, according to Morningstar. The hotel, at 5933 West Century Boulevard, appears to be owned by Seaview Investors, which lists the real estate as part of its portfolio online. Seaview’s chief executive Robert Alter is the named loan sponsor, per Morningstar. Servicer commentary via Morningstar only indicates that the special servicer, Rialto Capital Advisors, is reaching out to the borrower. Seaview did not respond to a request for comment.

Read more

Deal for Brookfield-owned DTLA office tower in works at $180M: sources

Google-occupied Venice office building trades for $40M

City Market of Los Angeles in the Fashion District downtown is suing a tenant that owes rent — to the tune of about $340,000. 

City Market L.A. is a partially developed mixed-use vision that’s bounded by 9th, San Julian, San Pedro and 11th Street. It’s the brainchild of  Peter Fleming, whose family co-founded what was once a produce market on the site.

City Market South, which takes up a chunk of the larger development site at the corner of 11th and San Julian Street, is owned and operated by City Market of Los Angeles and is a spot for dining and entertainment. It is the first phase of a 10-acre, mixed-use master-redevelopment plan for the century-old produce mart that now falls under Mark Levy, who signed the lease agreement included in the complaint as chief executive and president of City Market of Los Angeles. Levy was president of City Market South when Fleming made the proposal and led the plan years ago. 

The agreement in the complaint names Chris Herron as lessee, but the limited liability company named as defendant is connected to film producer Todd Makurath. It could be Makurath rented the space to Herron, but the specifics are unclear. Herron co-founded craft brewery Creature Comforts — which had a residency at City Market South — but stepped down before the complaint was filed in Los Angeles Superior Court. The attorney for the plaintiff and Makurath could not be reached for comment.

Jamison’s debt

The latest clock to to start ticking in Jamison’s portfolio is a loan on City Center on 6th, a K-town mall, which went to special servicing after the loan matured and Jamison didn’t pay it off. The debt has a current balance of about $51 million. 

A Jamison spokesperson said the company “engaged CBRE and signed a term sheet with a CMBS provider to refinance the matured loan, which is expected to close in 45 days,” and that “transferring the loan to the special servicer was a strategic decision in an effort to obtain an extension to work out a refinance.”

It’s not the only case of distress that has the developer playing for time. Dr. David Lee, who founded Jamison, the company his daughter Jamie Lee now runs, is the named sponsor on four loans connected to real estate in Koreatown and downtown that landed in special servicing: 811 Wilshire, Equitable Plaza, Central Plaza and City Center on 6th. The collective current balance of the special-serviced debt is about $230 million, according to Morningstar data. 

Jamison entered forbearance agreements on the loans connected to Equitable Plaza and Central Plaza but faces foreclosure on 811 Wilshire after a deal to sell fell apart, per servicer commentary via Morningstar. 

Too early to call

Jamison isn’t the only investor, by any means, to see its debt go to special servicing. According to Morningstar, the commercial mortgage-backed securities loan on a mall in Lakewood, once owned by Macerich, moved to special servicing. But there’s a catch — analysts suggest the transfer was more proactive than anything because the loan doesn’t mature until the summer, the mall traded hands pretty recently, and its new owners want to redevelop it. 

When Macerich sold the Lakewood Center for $332 million, the price included the assumption by the joint-venture buyer of a $317 million loan on the real estate, the company said in a Securities and Exchange Commission filing dated mid-August. That loan, it said, comes due June this year. Representatives for new owners Pacific Retail Capital Partners, Lyon Living and Silverpeak did not respond to a request for comment.

Deal downtown

Downtown did not appear once in The Real Deal’s ranking of the priciest multifamily deals in Los Angeles County last year — but it looks as though things are already different as 2026 rolls out, thanks to a pricey per-unit apartment tower trade in South Park.

MetLife sold 717 West Olympic Boulevard to APW Avenue Group for about $69 million, which comes out to roughly $453,000 per apartment. On a per-unit basis, it’s more than the priciest multifamily deal all last year: Waterton’s purchase of a Woodland Hills apartment complex for about $180 million, or $345,000 per apartment. On another straight-up comparison of price per unit, the MetLife trade still trails Carmel Partners’ $141 million Marina del Rey buy, which came out to about $578,000 per apartment, and was the priciest per unit deal all 2025.

Read more

Jamison $55M Koreatown mall loan lands in special servicing 

MetLife sells apartment tower downtown for $69M

Kilroy Realty has made another move to reshape its portfolio, shedding another not-so-occupied property as the company faces a wave of lease expirations. 

The deal for the Sunset Media Center looks like a discount for joint venture Hankey Investment Company — owned by billionaire Don Hankey, who put up President Donald Trump’s $175 million bond in his New York civil fraud case — and Barker Pacific Group. 

The new owners paid $61 million for the 22-story, 326,000 square foot office, which comes to about $187 a square foot, with a Measure ULA tax bill of $3.6 million, according to property records. Located at 6255 West Sunset Boulevard in the heart of Hollywood — about two blocks from the Walk of Fame — the property is 51 percent occupied. 

Hankey funded the debt for the purchase but amount was not disclosed; per the deed of trust, it is a $42 million note. 

Kilroy’s Los Angeles portfolio encompassed 53 properties, more than 4.5 million square feet of rentable space, and was 74 percent occupied, as of the quarter ended Sept. 30, 2025. In Los Angeles, 42 leases that amount to 507,000 square feet, or about 4 percent of its leased space, are set to expire this year.

Kilroy sold a Santa Monica office building that was only 65 percent occupied last July. Then the real estate investment trust purchased Maple Plaza, a Beverly Hills office campus that was 75 percent leased at the time and marked the company’s entry to the wealthy enclave — and may have given chief executive Angela Aman one of her better earnings call talking points since she took the corner office. Maple Plaza, she said on a third-quarter earnings call, had “become the strongest driver of leasing activity in our Los Angeles portfolio.”

The latest sale took Kilroy back to trimming inventory — and time will tell which way the REIT will lean on deals in 2026.

Calendar item

Speaking of 2026 … Happy New Year! You know what that means? Earnings season, annual reports and proxies. Time to see how Los Angeles’ publicly traded commercial real estate companies fared, and how much they paid their executives. Stay tuned.

Good news out of the Valley

In Oct. 2025, The Real Deal wrote the Encino Financial Center, a 13-story office building owned by Lowe Enterprises, received an appraisal that reduced its value by almost a third. That was after its loan landed in special servicing due to imminent monetary default. The nearly 230,000-square-foot office building at 16133 Ventura Boulevard is still valued at about $49 million compared to $72 million at loan issuance in February 2015, which is more than the $39 million debt connected to the property. 

But a loan modification was closed, and the note was extended to Nov. 2026, according to Morningstar, which buys Lowe more time. The borrower funded $2.5 million in new capital as part of the modification terms, per Morningstar. And, the three largest tenants, all of which had lease expirations next year, have extended their leases.

El Segundo trade

Downtown Los Angeles offices are still bumping along bottom, and even discounted deals are commanding pricier amounts on a per square foot basis in submarkets beyond the city’s center.  Take Majestic Asset Management and AVG Partners’ recent El Segundo buy. The three-story office building traded hands for $121.5 million, or about $405 a square foot. 

That is less than the $170 million, or about $560 per square foot, Ocean West Capital Partners and Lionstone Investments purchased the real estate at 777 South Aviation Boulevard for pre-pandemic. But it is more per square foot, than the priciest office trade last year: Uncommon Developers’ purchase of a Brookfield-owned downtown skyscraper for $210 million, or $201 a square foot. 

El Segundo’s office sector is nowhere near as distressed as downtown’s, but isn’t as prosperous as Century City’s either. 

Blackstone checks out 

Blackstone ditched an extended-stay, Marriott-branded hotel in Torrance, near Redondo Beach, for about $54 million, or roughly $218,000 per key. The buyer of the Residence Inn at 3701 Torrance Boulevard is Capital Insight. 

On a per room basis, in Los Angeles County, it isn’t as distressed as it could be, but still reflects an ongoing hospitality rut. It’s more than lender Corten Real Estate Partners’ purchase, via auction, of the Line in Koreatown for $68 million, or $177,000 a room — but less than Pebblebrook Hotel Trust’s sale of the Montrose in West Hollywood for roughly $44 million, or about $333,000 a room. 

Read more

AVG Partners, Majestic Asset Management buy El Segundo office building at steep discount

Blackstone unloads Torrance hotel in $54M deal

EY Plaza might have found a buyer. 

Morningstar Credit thinks so, the receiver says there’s no contract in place, and the brokerage is keeping its mouth shut.

This follows earlier reports by The Real Deal that Colliers — which replaced Eastdil Secured — was shopping the $275 million, non-performing note on the office tower in receivership. The loan was anticipated to trade at a discount, and Morningstar Credit earlier this month offered servicer commentary that a deal was shaping up with “a buyer likely identified.”

Receiver Gregg Williams said no buyer was under contract as of Friday, but did not answer when asked if one had been identified. The brokerage declined to comment and the special servicer did not respond to a request for comment. 

The identity of any potential buyer and pricing is a mystery — and it is fair to wonder whether any deal would stick. 

Two years ago, the downtown skyscraper was handed to a receiver after Brookfield defaulted on the debt. Since then a $130 million deal to purchase it collapsed, and its value has plummeted further. 

The 41-story, 900,000-square-foot property at 725 South Figueroa Street in Downtown Los Angeles’ Financial District was worth $446 million in August 2020, according to Morningstar. It’s worth $135 million, now. That puts its value at about $150 a square foot. 

It’s one of four office offerings in the Financial District tied to Brookfield and on the market via some form of distress — a quartet that adds up to almost a fifth of the Class A office space in the submarket.

Shopping the mall

In other Brookfield news, the commercial giant is selling FIGat7th. 

JLL has the offering, and the 330,000-square-foot mall at 735 South Figueroa Street is 85.8 percent occupied, per the broker. The shopping mall “could fetch $70 million,” according to Green Street, which would come out to about $210 per square foot — a bargain compared to recent retail deals, but not the typical distress that is synonymous with downtown properties owned by the landlord. Still, Brookfield is nearing an end of a three-year extension on a $58.5 million loan on the real estate. 

Under fire

Landlord Jamison reportedly turned away Section 8 voucher holders at its properties, according to nonprofit publication Capital & Main. If true, that would be a violation of state law, which prohibits such discrimination.  

Jamison, helmed by Jamie Lee, denied the allegations and in a statement claimed its management companies “accept and welcome tenants utilizing Section 8 vouchers.” The company called the reporting “completely wrong and/or misleading,” according to Capital & Main but did not cite any specific errors in the reporting.

Capital & Main said it hired testers to pose as Section 8 voucher holders and contact leasing agents at buildings owned or operated by seven landlords between late 2024 and early 2025. Of the 21 Jamison properties, agents at 15 said they did not accept Section 8 vouchers at all. At others, agents noted income or credit requirements that would exclude voucher holders, or failed to follow up after suggesting vouchers may be accepted. Between 2021 and 2024, only one Section 8 tenant moved into a Jamison property, according to Capital & Main.

Hollywood can’t take another takeover 

Soundstage owners can’t catch a break. Things were bad before all the talk of a Netflix-Warner Bros. takeover, but things could get worse. Michael Hackman, chief executive of Hackman Capital Partners, the largest independent owner and operator of soundstages, told the Wall Street Journal, “the whole ecosystem is really under distress.”

Filming in Los Angeles remains in a slowdown touched off by the 2023 dual writers’ and actors’ strikes and the rise of cheaper production centers abroad. The result lately has been sky-high vacancies and depressed rents for studios. The consolidation likely to accompany a Warner Bros.-Netflix match would mean even less demand for studio space. 

Hackman, who happens to be in the midst of a legal tussle with billionaire Rick Caruso over the $1-billion expansion and renovation of the former CBS Television City studio, isn’t the only one feeling the pain. 

Losses are ballooning at Victor Coleman’s Hudson Pacific Properties, which owns studios and offices. The company reported a loss of $136.5 million in the third quarter and mostly blamed the slump on the deconsolidation of Sunset Glenoaks, a $200 million purpose-built studio developed by Hudson Pacific in partnership with Blackstone. It’s only 8 percent leased after being delivered last year.

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Brookfield’s latest selloff: FIGat7th 

Brookfield distress roster puts 18% of LA Financial District in play

Downtown Los Angeles isn’t what it used to be — and it seems no one knows that better than Brookfield, which now is looking to dispose of four distressed office buildings that account for nearly one-fifth of the Class A space in the Financial District.

The commercial giant has ceded control of some ailing offices to a court-appointed receiver, sold some at steep discounts — and it still has plenty in play. Brookfield and its lenders (and receivers and special servicers) are peddling four active offerings that totals about 4.9 million square feet of Class A office space in the submarket, roughly 18 percent of the total inventory. 

The Financial District has a total of around 26.5 million square feet of Class A space, according to the most recent data from brokerage Avison Young (Bunker Hill is commonly considered part of the Financial District, although Avison Young breaks out the data). 

Investors with deep pockets and hearty appetites for risk can consider:

• EY Plaza: Colliers is marketing the $275 million, non-preforming note tied to the property at 725 South Figueroa Street, in receivership. That note is expected to trade at a massive discount. Last the publication heard, Colliers was calling for offers. It is unclear whether it found a lucky buyer. If the brokerage did, who knows if the deal would hold — Carolwood’s prior $130 million deal collapsed.
• Bank of America Plaza: Colliers is shopping the defaulted commercial mortgage-backed securities loan connected to the skyscraper at 333 South Hope Street, in receivership. The debt balance is $400 million, and the brokerage anticipates substantially discounted bids.
• Wells Fargo Center’s North Tower: Eastdil Secured is marketing the mortgage loan on 333 South Grand Avenue, which includes an office tower and a retail asset. The roughly $506 million debt on the property is in default, though it is not in the hands of a receiver. Bids are anticipated around $196 million, according to data and analytics provider Green Street.
  
• Wells Fargo Center’s South Tower: Newmark is shopping the skyscraper — a sister to its sibling to the north — at 355 South Grand Avenue. Bids are anticipated to come in around $157 million, per Green Street, not enough to cover the $263 million debt balance that came due.

What happens now? 

A truism seems to be in the works, according to an informed industry source who said the buildings will find buyers, it’s just a matter of pricing. 

Sounds as though downtown’s office market is still bouncing along a soft bottom. Now to see if Brookfield’s latest offerings set a firm floor.

Turnbridge turns up in desert

Turnbridge Equities closed on a long-delayed, debt-laden development in a Palm Springs-area resort city, getting the SilverRock Resort project in La Quinta out of bankruptcy for a haircut price of $65 million, or $500,000 an acre.

The unfinished resort’s prior developer, Robert Green, defaulted on debt and later filed for bankruptcy — $270.5 million in claims. Prior estimates put the property’s value at $300 million to $400 million.

Turnbridge has a single luxe hotel with branded condominiums and estate-sized single-family homes on its mind for the 130 acres it got. The new owner anticipates that as an initial phase that will cost $735 million to build out.

The SilverRock Golf Course, owned and operated by the city, is set to be transferred to Turnbridge once the hotel is completed.

The property, at 79179 Ahmanson Lane, isn’t far from where the Coachella and Stagecoach music festivals are held, ultra-exclusive Madison Club, where Apple’s Tim Cook and Grammy-winning singer Adele are among the list of bold-faced names who own vacation homes there.

Unmatch 

Tinder and Hinge parent company Match Group dumped a West Hollywood office building. The property at 8800 West Sunset Boulevard traded hands for $35.5 million, or around $480 per square foot. 

The buyers appear to be Omega Law Group founding partners Edwin Saghian, Robin Saghian and Shahab Mossavar-Rahmani, who signed a loan document and are members of the limited liability company named as grantee. It could be the partners were representing a client, but their accident and injury firm is located at the purchased property, so it seems more likely they are the buyers. 

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Another distressed Brookfield DTLA skyscraper hits market

Turnbridge closes on unfinished Coachella Valley resort for $65M

The Rexford takeover rumors seem to have traction.

The industrial real estate investment trust indicated as much a couple days ago, after market close, when it announced a chief executive shakeup and a changed capital allocation strategy.

The dual announcements came months after a report that Paul Singer’s Elliott Investment Management built an active stake in the company. Rexford more recently took the opportunity of an earnings call, to disclose that it had met with the relentless activist investor. 

Rexford chief operating officer Laura Clark is now in line to succeed co-CEOs and co-founders Michael Frankel and Howard Schwimmer, the company announced. Chairman Tyler Rose, who recently replaced Richard Ziman, said the “transition is the culmination of the board’s multi-year succession planning process.”

There’s more to it, according to Newport Beach-based industry tracker and data analyst Green Street.

“It appeared Ms. Clark was on the path to eventually succeed Co-CEOs Frankel and Schwimmer upon their retirement, but there is no question that Elliott’s involvement sped up the timeline,” a Green Street analysis read. 

Frankel and Schwimmer aren’t only dropping their C-suite gigs, but their seats on the board of directors, too, which was characterized as a surprise in a recent BMO analysis.

Nonetheless, Frankel and Schwimmer have entered into a transition and separation agreement, each being granted a restricted stock award valued at $22.6 million. That’s more than their $13 million total compensation for 2024.

In a separate announcement, Clark said the company would maximize returns by selling assets and reinvesting capital into high-yielding assets and share repurchases. During the latest earnings, the company said it had no planned purchases, only dispositions, a change from its buy-happy days. 

The company said it would add a new independent director by the end of the year, too. Any guesses? Either way, shares of the $10 billion, typically vanilla-REIT, rose on the news. 

Reversal behind Hudson Pac reverse split?

In other publicly traded, real estate investment trust news: Studio and office owner Hudson Pacific Properties announced a board-approved 1-for-7 reverse stock split that’ll take effect Dec. 1. 

Reverse stock splits consolidate the number of existing shares into fewer, higher-priced shares and are sometimes done to avoid being delisted — but the company’s shares are trading under $2 per share, with the $1 mark a red flag for delisting. Still, the announcement comes after the Victor Coleman-helmed company’s losses ballooned to hundreds of millions of dollars. 

Selling debt

Distressed debt, anyone? 

Eastdil is marketing an offering to purchase the mortgage loan connected to a Brookfield-owned office tower on Bunker Hill. The Downtown Los Angeles property, at 333 South Grand Avenue, includes a 54-story office building, called the Wells Fargo Center — North Tower, along with a three-story retail asset called the Halo.

 (A sister South Tower is not included in the deal).

The roughly $506 million debt on the Wells Fargo Center — North Tower is in default, but how much the note would fetch, if it trades, is unclear. Eastdil shared no hints in the offering memorandum, nor did it say whether it was representing Brookfield or its lenders. 

But the loan connected to EY Plaza, another Brookfield-owned Downtown Los Angeles office tower, now in a receiver’s hands after debt default, may offer a clue. Colliers is marketing the $275 million note connected to the property, on behalf of lenders, and expects the note to trade at a massive discount. 

Real estate whodunit solved

Cue the Law & Order theme song …  The J.J. Abrams’ Bad Robot building mystery buyer is Teddy Schwarzman’s Black Bear. 

The independent studio founded by Schwarzman — son of Stephen Schwarzman, billionaire chairman and chief executive of Blackstone — purchased the three-story, brick building located in Santa Monica for about $31 million. 

But will Schwarzman keep Abrams’ esoteric typewriter sign, an inside joke about the Hollywood pro’s personal style and direction choices? 

Another mystery. 

End of an era

Related California chairman and chief executive Bill Witte is stepping down after more than three decades at the helm. Witte will become chairman emeritus, and two company executives Gino Canori and Ann Silverberg will split the CEO title effective Jan. 1. Canori will head market-rate, mixed-use and commercial with Silverberg in charge of affordable residential developments.

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Realty Bancorp Equities managing member and principal owner Norman Kravetz no longer appears on the company website. It’s unclear why. It could be related to a distressed office portfolio that has made headlines recently. But there is some good news to share: the landlord landed a tenant. 

Ecrypt announced it inked a long-term, off-market lease for 23,000 square feet at Kravetz’ 29899 Agoura Road, once home to the Los Angeles Rams. The deal is valued at more than $7 million, according to a release.

Earlier, Kravetz-connected entities defaulted on the commercial mortgage-backed securities debt secured by a five-office-property portfolio located throughout the San Fernando Valley — and faced calls to cede control to a court-appointed receiver; 29899 Agoura Road is part of that portfolio.

A Wells Fargo Bank unit, on behalf of the securities holders, and the special servicer claim the entities owe about $72 million. That’s more than the Kravetz portfolio is worth. According to Morningstar Credit, the offices are valued at $50 million, half of their underwriting, months before the pandemic. The offices are only 71 percent occupied, compared to 98 percent at issuance, per Morningstar, but the latest lease amounts to 7 percent of the rentable space.

It’ll provide a boost. But enough to save Kravetz? Who knows. 

The court hasn’t ruled on whether to appoint a receiver to take control of the five-office-property portfolio or not — but according to the lender, the borrowers, entities connected to Kravetz and his Realty Bancorp, consented in the loan documents to the appointment of a receiver in the event of a default with or without notice of a hearing. 

Kravetz and attorneys for the plaintiff and defendants did not respond to a request for comment. 

Bad Robot sells 

If you’ve ever binge-watched Lost, you probably remember the red robot that appeared on your screen after every episode. It was the logo for J.J. Abrams’ Bad Robot. Well, Abrams sold the brick building that housed the production company for about $31 million. The buyer is a mystery — but could be a client of HCVT chief executive Vicken Haleblian. 

The deal for the 18,000 square-foot creative office space located in Santa Monica, near the pier, comes out to around $1,700 per square foot. The building has a big sign on the outside that says the National Typewriter Company, not Bad Robots…if you know, you know. 

Chrome Hearts buys

Everyone wants a beach house, so it’s no surprise that one of California’s priciest per-key deals ever and priciest all year was a small, stunning Malibu hotel that calls itself “your California beach house.”

Chrome Hearts, owned by Richard and Laurie Stark, purchased the Surfrider for $37.5 million. That comes out to about $1.9 million a room. The luxe 20-room oceanfront property was owned by Dauntless Capital Partners, and the Marella Group brokered the deal.

Exceptions

The two deals mentioned above are anomalies in Los Angeles commercial real estate. 

Creative offices are unlike other spaces that haven’t recovered post-pandemic — which are not typically connected to J.J. Abrams and his famed production company or locations of star-studded cocktail parties, so the general rules don’t apply. Santa Monica, for example, has a 26 percent vacancy rate in its office sector, and properties aren’t trading for more than a thousand dollars a square foot. 

When it comes to hotels, many are defaulting on debt, facing foreclosure and a challenging sales environment, in part because of the so-called mansion tax that has resulted in fewer commercial trades. Homelessness is believed to have contributed to a dip in tourism that’s hurt revenues, and a $30 minimum wage for hotel workers is also spooking investors. 

The exception, of course, is the one-of-a-kind Surfrider in Malibu, where David Beckham and Margot Robbie have stayed and there is a guest-only rooftop bar and restaurant that overlooks the Pacific. 

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JMB Realty nears finish line for Century City Center office tower

Fox advances studio lot redevelopment project in Century City

Earnings season comes with earnings calls, and one Los Angeles commercial real estate CEO this week showed how to work both ends of the expectations game that comes with publicly traded outfits.

Los Angeles-based real estate investment trust Kilroy Realty reported net income of $156.2 million for the quarter ended Sept. 30 compared to $52.4 million a year earlier. Revenue declined but not by much, with $279.7 million compared to $289.9 million a year ago.

Chief executive Angela Aman touted the firm’s $205 million purchase of Maple Plaza, an office campus located in Beverly Hills. The three-story, 300,000 square-foot office space marked the company’s entry to the wealthy Westside, and it might have given Aman one of the best earnings-call talking points since she took the CEO’s job nearly two years ago. 

Maple Plaza was 75 percent leased at the time of purchase, and has since “become the strongest driver of leasing activity in our Los Angeles portfolio,” Aman said on the call.

And that’s saying a lot given Kilroy’s Los Angeles portfolio encompasses 53 properties, more than 4.5 million square feet of rentable space, and is 74 percent occupied overall. 

Aman and her crew told analysts and others on the call that the $5 billion company has inked more than 550,000 square feet of leases, new and renewals. Then she showed the other side of her CEO chops — managing expectations for next year, when 970,000 square feet of leases are set to expire. The company was staring at 1.9 million square feet before it locked down occupancy for about half the space with renewals. Aman said the company now anticipates “move-outs in 2026 for the majority of what’s left in the expiration pool.” 

That’s about 500,000 square feet, if you apply mathematics to the earnings-call narrative. Aman said the hope is to chip away at the pending expirations via new leasing. 

The market seemed to like the overall story, in any case, sending Kilroy shares trading higher on earnings in the wake of the earnings report.

Hudson Pacific pending

Spooky season is over but earnings season isn’t. Victor Coleman’s Hudson Pacific Properties reports earnings next Wednesday, and that is one we’re paying particular attention to after the company posted hundreds of millions in financial losses.

Bren ditches downtown SD

The country’s richest developer, Donald Bren, is all out of offices in downtown San Diego. The billionaire’s Irvine Company ended its reign as the largest office landlord in downtown — and its presence.

The company dumped its last office tower: One American Plaza, a 34-story, 650,000-square-foot property.

John Saca and daughter Payton Saca purchased the real estate for $120 million — Bren’s company paid about $300 million for it in 2006. 

He appeared to have wanted out of the area, and the deal marked the end of his discount selling spree that began with the Symphony Towers in 2024. 

This happens to be the second occasion the Sacas and Bren were in business. In November last year, John Saca’s Saca Development purchased another Irvine Company-owned office building in downtown San Diego for about $44 million, or less than a third of what Bren’s company paid for the tower in 2005.

It’s uncharacteristic for Bren to sell, especially at such discounts, which makes the recent deals something more akin to tea leaves than standard comps.

Art Deco gem in receivership 

A couple months ago, we posed a question: Does Rockwood have time to save Santa Monica Clock Tower? 

The clock has struck midnight, it seems and the office tower is in the receiver’s hands now. 

The court appointed a receiver to take control of the property that was once the tallest in the city after special servicer Rialto Capital sued Rockwood Capital, alleging that the Santa Monica Clock tower owner defaulted on commercial mortgage-backed securities debt connected to the property, and owed about $25 million. ​​

Rockwood, according to court documents, consented to a receiver in hopes of a sale. Earlier, servicer commentary noted Rockwood expressed interest in transferring the title back to the lender — after the loan landed in special servicing and the property that is only 43 percent occupied received a value haircut. 

Honoring the late Nelson Rising

Earlier in October, the Rose Bowl Legacy Foundation dedicated the Nelson C. Rising Legacy Bridge at the Rose Bowl Stadium. The late Nelson Rising was known for the part he played in developing Los Angeles’ skyline. His son Christopher Rising, who now helms Rising Realty Partners, was there to honor his father. 

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Movers: Lincoln Property Co poaches Savills occupier services team

LA developers go all in on affordable housing amid cost-cutting ED1

Fame, but no fortune? 

I recently wrote about two pieces of real estate that once upon a time each had a moment in the sun: A beachfront mixed-use property that was home to Snapchat and synonymous with the social media company’s rise, and an apartment building that was featured on the Eagles’ Hotel California album back cover. 

The former sold, but for less than its prior purchase price and only after a struggle to lease it. 

The latter is now scheduled for a foreclosure auction, with San Francisco multifamily stalwart Neveo Mosser and his Mosser Capital owing $29.4 million. A notice of default went out before an auction for the apartments at 6500 Yucca Street was scheduled for October 28. 

Maybe it wasn’t such a lovely place after all — the refrain from the Eagles’ title track notwithstanding — or maybe the pending auction says more about Mosser’s troubles. 

Mosser Companies early last year, defaulted on an $88 million loan tied to 12 apartment buildings throughout San Francisco. 

Oh, Snap!

Meanwhile, the pair of three-story oceanfront buildings in Venice, home to Snapchat when it was headquartered in the Silicon Beach neighborhood, sold for $30.7 million. The 10 live-work lofts and ground-floor retail at 619 and 701 Ocean Front Walk were purchased by Stefan Ashkenazy, who owns the Petit Ermitage, a boutique hotel in West Hollywood.

The seller, DLJ Real Estate Capital Partners, purchased the property for $40.5 million in 2014. When Snapchat consolidated its Silicon Beach office footprint in Santa Monica, it left a glut in the office market of funky Venice.

Laeroc won’t lay down

Laeroc Partners isn’t going down without a fight. 

Cathay Bank sued the company, claiming it defaulted on a $31 million loan. The lender requested a foreclosure on the loan, and that a receiver be appointed for the office and data-center property at 530 West 6th Street.

Laeroc Partners not only denied all allegations but asked that the complaint be dismissed with prejudice, with Cathay Bank covering all legal costs. 

The court documents were signed by Kim Benjamin, president of Laeroc Partners. 

Attorneys representing Cathay Bank and Laeroc Partners did not respond to a request for comment.

Hello, BANC

In more downtown news, Banc of California, inked an 11-year lease for 40,000 square feet at 865 South Figueroa Street — and now its name will loom 35 stories over the cityscape, thanks to the naming rights that came with the deal. 

So say goodbye to the TCW logo, and try not to call it the TCW Tower because the asset management company left two years ago. 

And please know that I know that not every naming deal lives up to its name — this is the same Banc of California that signed a $100 million pact to put its name on the Los Angeles Football Club stadium in Exposition Park but pulled out of the deal four years later.

EY Plaza, again

In the last column, I relayed that EY Plaza had taken another value haircut, this time by a relatively small 10 percent to $135 million. Prior cuts have been steeper, after all, from a highwater valuation of $446 million before the pandemic took full hold. 

Now it’s getting around time to see if the cuts will come on the $275 million note connected to the distressed office tower that Colliers plans to peddle at a discount.

Colliers said it “will be calling for offers on Tuesday, October 28,” declining to share any further information on whether the brokerage has seen any interest thus far.

If you aren’t up to speed on all things EY Plaza, here’s a catch-up in 10 seconds or less: It’s a 41-story office building at 725 South Figueroa that was owned by Brookfield before the company ceded control to a receiver after defaulting on hundreds of millions of commercial mortgage-backed securities debt. One deal for the tower has fallen through.

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EY Plaza can’t catch a break, or at least its lenders can’t. 

It wasn’t enough for a deal to purchase the distressed downtown office tower to fall apart, no, its value also took a hit. It’s now worth about $135 million, down about 10 percent from its last valuation, according to Morningstar Credit. That’s a significant drop from the $446 million it was once worth.

It’s becoming more apparent that Adam Rubin and Andrew Shanfeld’s Carolwood dodged a bullet when its $130 million deal collapsed. 

The 900,000 square foot, 41-story, Class A office building at 725 S. Figueroa Street was placed in receivership two years ago, after owner Brookfield defaulted on $275 million commercial mortgage-backed securities debt. 

Once the deal drama played out, after The Real Deal reported the story, it was announced that Colliers, who replaced Eastdil, was marketing the $275 million non-performing loan connected to the property. Colliers made it clear that it anticipated the note to trade at discount. 

It’s not unreasonable to think that news further impacted the marketability of the note. Neither Colliers nor the court-appointed receiver responded to a request for comment. 

Mum’s the word

If it weren’t for two analysts and their prodding, Rexford Industrial probably wouldn’t have mentioned activist investor Elliott at all during its third quarter earnings call. But they asked the question we’ve all wanted an answer to since it was revealed Elliott reportedly built an active stake in the industrial real estate investment trust and had become one of the largest shareholders. 

Unfortunately Rexford was very hush-hush and only said it has met with Elliott and has a constructive dialogue with Paul Singer’s hedge fund (that tends to command attention), as it encourages with all its shareholders, but wouldn’t discuss the nature of said discussions. 

Nonetheless, the company reported a net income of $87.1 million for the third quarter, compared to $65.1 million a year earlier, an increase of about 34 percent. Revenues increased too, to $253.2 million in the three months ended Sept. 30 — and the company executed 3.3 million square feet of leases in the quarter and sold three properties (two in Los Angeles County) for $53.6 million. It was an earnings beat, but it did mark a change, in that Rexford is no longer on a buying spree. 

Kilroy Realty and Hudson Pacific Properties are next to report earnings, so stay tuned. 

Receiver central 

Another downtown Los Angeles commercial property owner could cede control to a receiver. 

Lender Cathay Bank sued a company connected to Laeroc Partners, borrower and owner of 530 W. 6th Street, alleging it defaulted on a $31 million loan that matured in September. Cathay Bank requested a receiver be appointed to take possession of the 13-story, 160,000-square-foot data-center and office property and for it to be foreclosed upon. It appears the property called the Telecom Center was already on the market, according to a NAI Capital brochure, which does not include an asking price. 

Tour, tour, tour 

Senior editor Lauren Schram toured Related California’s new 700 Broadway mixed-use development in Santa Monica that just began leasing, so we’re going to give you a little taste of what we saw. 

On par with the Southern California lifestyle, the apartment complex has not one but two gyms (and one is an Equinox); a 75-foot rooftop lap pool with a hot tub, cold plunge and two sauna barrels because health and wellness really is everything nowadays and if celebs have a cold plunge so should you; a pet spa outfitted with Andy Warhol-designed black and white French Bulldog wallpaper because who doesn’t love a Frenchie; and a Vons, instead of an Erewhon, Whole Foods or Trader Joe’s.

That can all be yours for $3,995 a month, if it’s a studio you want.

Lauren Schram contributed reporting.

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Residential

San Francisco

Donald Bren bucks trend, presses bet on multifamily

Builder’s remedy hasn’t beaten all the fight out of Beverly Hills

Commercial real estate professionals shuffled through a film set and gathered at stages five and six at the Lot at Formosa Wednesday morning — and after chatting over coffee and some very-L.A. breakfast burritos, they heard from Ethan Penner, the pioneer of commercial mortgage-backed securities running for governor. 

Penner is an independent candidate and a decided long-shot in our Golden State, but you would not have known the latter as he made his case to a room full of decision makers in a studio in West Hollywood. 

He set his premise with a fundamental question: Is real estate still all about location, location, location? After all, downtown Los Angeles was hot once and now it’s not — something his company knew all too well, he said, with soured investments that touched him personally.

Penner then pivoted to the real reason he was on stage: Politics. 

He showed some fang right off the bat, blaming politicians — not the pandemic — for the rough shape of downtown these days. Penner said we all made one of the worst decisions in entrusting politics to the politicians.

Penner went on to trash the two parties and media for creating our current disconnect. He took aim at the toxic political atmosphere, mentioning that his son went through a breakup over the president (no more details on that unfortunately). Then he turned his longshot status into a flex of sorts, claiming that crazy things happen when there’s “systemic capitulation.”

Unplugged on ULA

The latter half of the conference was just as interesting, a panel on policy proving particularly so. Measure ULA, the so-called “mansion tax,” came up. California Landmark Group’s Ari Kahan said it wasn’t the elephant in the room, but the elephant running through the room. 

Kahan, similar to others, claimed the city is redlined so long as Measure ULA is in effect. That’s because, he explained, it doesn’t make sense to throw your capital at development when the economics don’t make sense and a tax eats your profits. 

He said all this while the Los Angeles Department of City Planning’s Kevin Keller was one person down on the same stage. He did, however, give his public-sector colleague a break, noting that Measure ULA isn’t a planning issue — rather something voters adopted in a citywide vote.

The Max Collaborative’s Kevin Ratner didn’t hold back either. Investors see beyond Measure ULA when coming up with reasons to cross L.A. off their list, with many steering clear because they don’t want to be around when the next shoe drops, he said. It used to be worth it, going through the arduous entitlement and development process, because then you owned something in Southern California. 

That’s not the case anymore, he said — investors expect bad news around every corner now.

Will the real Leo Pustilnikov please stand up?

Leo Pustilnikov of Builder’s Remedy fame has made another downtown buy. 

He joined fellow investors in purchasing the PacMutual, an office complex encompassing three interconnected structures, for less than $50 million. Ivanhoe Cambridge, now La Caisse, purchased the historic real estate a decade ago for $200 million. 

It’s the second piece of DTLA history for Pustilnikov, who a month earlier bought the Original Pantry, a shuttered diner once owned by the late Los Angeles Mayor Richard Riordan. Pustilnikov said the beloved restaurant and its workers were making a comeback. 

When he made his office buy, he and partners said they were thrilled to contribute to downtown’s revival as the owners of the century-old architectural jewel box.

It raises the question of whether Pustilnikov is a white knight, a bargain buyer — or both? 

Retail deals by the numbers — all the way up to nine figures

Deal number one: A company connected to Metlife sold the two-story shopping center called One Westside to an entity that names Mark Darwish as a manager for $66.9 million, records show. Darwish confirmed the deal; the seller declined to comment.

Deal number two: Mamo’s Long Beach Marketplace, an outdoor retail center, notched a $56 million refinance. LoanCore Capital provided the fresh financing on the property, which is home to fan-favorite Trader Joe’s and, eventually, apartments, if all goes as planned. 

Deal number three: CenterCal Properties, owner of 2ND & PCH, and DRA Advisors purchased the Long Beach Towne Center for $145 million.

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Own a hotel in Los Angeles? Then, you’re probably feeling some pain. Relevant’s Grant King is these days. 

A lender wants to sell the equity interests in the Dream Hollywood hotel, owned by a company connected to Relevant. A foreclosure auction is scheduled for mid-October. 

The lender, LCP Group, alleges Relevant owes more than $30 million in unpaid debt connected to the 10-story, 178-key hotel at 6417 Selma Avenue. 

King, for his part, said Relevant is working on a loan recapitalization and extension with the lender. If he loses the hotel, it wouldn’t be the first time. The Tommie and Thompson Hollywood hotels — both sporting different names now — were under Relevant’s ownership when they went to lenders two years ago. 

King isn’t the only owner in a jam. Queensgate Investments defaulted on the debt connected to the Freehand Los Angeles, a hotel-meets-hostel downtown, to the tune of $71 million and too faces foreclosure. The London-based company missed its maturity date for the loan tied to the 226-key hotel at 416 West 8th Street that was once the 13-story, Beaux-Arts-style Commercial Exchange Building.

And, this may only be the beginning, Atlas Hospitality Group’s Alan Reay told The Real Deal. Several Los Angeles hoteliers are receiving notice of defaults, and investors are looking at the city with disdain.

Among the the pitfalls that are keeping would-be investor out of L.A. is  Measure ULA, the so-called “Mansion Tax,” that goes beyond mansions and has led to fewer commercial trades, Then there’s homelessness and crime, a related dip in tourism hitting revenue, and a $30 minimum wage for hotel workers in the City of Los Angeles adding to costs.

An uncertain economic environment marked with high interest rates is a kicker.

Add it up and there’s a new calculus, according to Reay, who says he would have called the Dream Hollywood and the Freehand desirable and well-located a few years ago.

Things have changed. 

Running out of time

We’ve been following the Rockwood Capital-owned Santa Monica Clock Tower for a few months now. Back in May the debt connected to what was once the city’s tallest skyscraper went to special servicing. By July the property saw its value slashed and Rockwood appeared ready to surrender.

Fall arrives with Rialto Capital, the special servicer, which acts on behalf of the lender, suing a company connected to Rockwood, claiming the company defaulted on about $25 million in debt.

The special servicer requested a court-appointed receiver to take possession of the 53,500-square-foot, century-old, Art Deco office tower at 225 Santa Monica Boulevard. Rialto wants to foreclose and sell the Santa Monica Clock Tower that is only 43 percent occupied.

Now to the Valley

The Encino Financial Center, a 13-story office building owned by Lowe Enterprises, received a recent reappraisal that reduced its value by almost a third. The downgrade came after its loan landed in special servicing due to imminent monetary default, according to Morningstar Credit and Trepp. 

The about 230,000-square-foot office building at 16133 Ventura Boulevard is now valued at $48.8 million compared to $72 million at loan issuance in February 2015. That is still more than the $36.9 million debt connected to the property, and according to servicer commentary via Morningstar, modification discussions are ongoing. Lowe, which on its website notes the Encino Financial Center was the first office building the company acquired on its own behalf, declined to comment. 

Earnings season

Earnings are near. Los Angeles-based, publicly traded, real estate investment trusts Hudson Pacific Properties, Kilroy Realty and Rexford Industrial Realty have announced dates for their third quarter earnings calls in October and November. 

Last quarter, Hudson Pacific reported an $83 million loss; Kilroy reported an increase in income to $68 million and announced a $40 million Santa Monica office sale; and Rexford reported an increase in income to $113 million.

Stay tuned to see how the companies fared through the third quarter.

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Things just keep getting worse for Norman Kravetz.

The Realty Bancorp Equities principal defaulted this summer on the commercial mortgage-backed securities debt connected to a five-office-property portfolio, and now faces calls to cede control to a court-appointed receiver. 

The calls are coming via a Wells Fargo Bank unit on behalf of the commercial mortgage-backed securities holders.

Kravetz-linked entities are on the hook for around $70 million, which is more than five-building portfolio is worth.

The 346,800-square-foot portfolio is spread over the San Fernando Valley, including three properties in Agoura Hills — one of which was home to the Los Angeles Rams for years before the team’s billionaire owner Stan Kroenke moved headquarters as part of a $10 billion development plan at Warner Center — and one in Calabasas and another in Woodland Hills. 

The five offices were valued at $101.6 million at underwriting in September 2019, a few months before the pandemic was declared and remote work took over. In July, the portfolio was appraised at $48.85 million. Occupancy was 71 percent and properties were not making enough money to pay off debt, running a debt service coverage ratio ranging downward to 0.59.

This isn’t the first bad bet Kravetz has made. Realty Bancorp Equities defaulted on more than $100 million in loans tied to an office complex in Santa Monica; the company later sold the property at a price that didn’t cover its debt. 

The Real Deal previously reported on Kravetz’s delinquency on the five-building portfolio, after his debt landed in special servicing, and a multimillion dollar haircut to the portfolio before the matter headed to court. 

Stay tuned for more.  

Kravetz could not be reached for comment.

Leaning tower of Pasadena 

Southern California’s landscape of office distress goes beyond one valley: A nine-story property called the Pasadena Office Tower in the heart of the San Gabriel Valley faces foreclosure after its owners defaulted on $40 million debt. 

The default notice and foreclosure threat came after the owners, entities connected to Albert Taban and Michael Pashaie, managing partners at Jade Enterprises and Golden West Properties, saw the property’s value cut by more than half as tenants cleared out. 

Now the 142,000-square-foot office, which is 69 percent occupied, is only worth $23 million.

That value is on paper, though, and we’ll have to see if the current trend of deep discounts on office properties eats up that slim margin, too.

School daze on multifamily

Speaking of vacancies, Azusa Pacific University sold an uninhabited apartment complex to Legacy Partners for $91.8 million. 

The university received tax exempt financing for the property that would become student housing — but occupancy lagged in the post-pandemic era on college campuses, leading to the sale.

Hudson Pacific cuts, adds to board

Hudson Pacific Properties announced more changes to its board of directors. Mark D. Linehan left the publicly traded real estate investment trust after 14 years and was replaced by T. Ritson Ferguson. 

In a Securities and Exchange Commission filing, the company said Linehan stepped down “due to his desire to devote more of his time to other professional commitments,” and that he “expressed no disagreement with the company.” 

Ferguson was the chief executive of CBRE Global Investors and now an investment committee member.

Ferguson’s cash compensation, per the Hudson Pacific’s non-employee director compensation program, amounts to $40,000 for an annual retainer and $12,500 for being a member of the audit committee. He could elect to receive vested shares of the company’s common stock instead of that cash — but he is already set to earn an annual award of restricted stock units valued at $90,000. 

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The desolate and distressed San Francisco Centre, once a Westfield mall before its owners handed back the keys, stands in stark contrast to Unibail-Rodamco-Westfield’s outdoor shopping center in Century City. 

The San Francisco mall, owned by Unibail-Rodamco-Westfield and Brookfield Properties until the two entities stopped making payments on a $558 million note and then bailed, is now worth less than $200 million. 

That means the shopping center is worth a billion dollars less than it was nine years ago. It isn’t hard to see why: the 1.5 million square foot retail spot is only seven percent occupied. And the lender wants the shopping complex off its books and to recoup some of what it is owed immediately, per special servicer commentary. 

The Westfield Century City doesn’t compare. Its owner was recently set to close a $925 million commercial mortgage-backed securities refinancing — and an appraisal a couple months ago put the Los Angeles mall’s value at $2 billion. Plus, it is nearly 96 percent occupied. 

Time to surrender?

Does Rockwood Capital have time to save the Santa Monica Clock Tower? That’s the question The Real Deal posed last month after learning the Art Deco office building that was once the city’s largest skyscraper saw its value slashed and its debt land in special servicing.

But it appears Rockwood is ready to surrender. Special servicer commentary said: “Borrower has expressed interest to transfer title back to the Lender,” per Morningstar Credit.

The century-old Santa Monica Clock Tower was recently appraised at $27.4 million compared to $49 million at loan issuance. That was after the $26.7 million commercial mortgage-backed securities loan connected to the offices went to special servicing and missed its maturity date.

Occupancy declined to 43 percent earlier this year compared to 100 percent at loan underwriting a decade ago — and the around 50,000 square foot property is not making enough money to pay off its debt.

Still, handing the keys back may not be a done deal. The special servicer said it was evaluating all options.

Buyer revealed

We knew Tishman Speyer was selling a Beverly Hills office building for more than $200 million when we published the scoop earlier in the summer, but the buyer was a mystery. Now we know it is none other than Kilroy Realty — and according to a person familiar, the deal, coming out to about $707 a square foot, was a competitive process.

The publicly traded real estate investment trust purchased the offices for $205.3 million — a debut in the affluent area for Los Angeles-based Kilroy Realty, and an exit for Tishman Speyers from a trio of Beverly Hills office properties purchased two decades ago. Tishman Speyer cashed in all three in the past year or so, all at a profit.

The latest, Maple Plaza, which was 75 percent leased, Kilroy Realty purchased via cash on hand and recent disposition proceeds. This comes after Kilroy Realty sold a Santa Monica office building for $40 million and teased another sale at a similar price next year during second quarter earnings.

On the scene

Commercial real estate executives gathered for back-to-back events this week: a TRD roundtable conversation led by Editor-in-Chief Stuart Elliott and dinner at Mother Wolf Tuesday evening and a Bisnow conference the next morning downtown.

TRD’s panelists — Cityview’s Sean Burton, Cain International’s Larry Green, and Christie’s International Real Estate’s Aaron Kirman — discussed whether the tariff bark is worse than bite, Measure ULA pain and more (video coming soon, so stay tuned). Developer Leo Pustilnikov made an appearance at both events. 

The other event — on the gutted 23rd floor of 601 S. Figueroa, the office tower Uncommon Developers purchased from Brookfield Properties for $210 million earlier this year — at times felt like a marketing opportunity and maybe could have focused more on downtown’s homelessness problem but still offered thoughtful insights. 

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Weeks ago The Real Deal broke the story that a deal to sell the Brookfield-owned EY Plaza to Adam Rubin and Andrew Shanfeld fell through, putting the non-preforming loan tied to the 920,000-square-foot tower back on the market.

Then came our scoop that a deal for 811 Wilshire also fell out, leaving Jamison in default and facing foreclosure on the 337,000-square-foot property.

There’s no telling what next week will bring — you’ll just have to stay tuned to TRD, as usual — but it does appear that local Jamison is in better shape than global Brookfield as far as the two downtown L.A. property values go. The debt connected to 811 Wilshire stands at about $35 million, compared to the original $39 million note that matured and moved to special servicing last year. Jamison bought the property in the early 2000s for $26.5 million. It was valued at $68 million when the current loan was originated in 2014, and it’s been appraised at $40.5 million more recently.

EY Plaza, on the other hand, fell out of its deal with Carolwood at $130 million. That explains why the $275 million note on the property is being marketed at a discount. 

Backup plan for Original Pantry?

Leo Pustilnikov of Builders Remedy fame — AKA the guy who beat the Beverly Hills NIMBY crowd — might have a backup plan if his out-of-blue buy of the Original Pantry just up Figueroa from LA Live leaves him disenchanted with the restaurant business.

Pustilnikov told KABC Radio’s Frank Mottek on the day of his reported $5.5 million deal for the recently shuttered restaurant — a longstanding asset in late Los Angeles Mayor Richard Riordan’s portfolio — that it’s a pure dining play.

“It’s coming back, the workers are coming back, the Pantry is coming back,” touted the eclectic Pustilnikov, who also has significant holdings of commercial real estate from Huntington Beach to Skid Row. 

Pustilnikov can look about a block away for a different potential for the prime location the Original Pantry occupies at 9th Street and Fig — and note that 9th Street is known as James M. Wood Boulevard for a stretch just east of Figueroa. By any name, however, Pustilnikov can hardly miss the 2.3-acre open patch of land at 9th and Francisco streets, especially now that it’s got a price tag of $100 million.

The land, owned by nonprofit Salvation Army, spans 832 and 900 James M. Wood Boulevard and 916 and 927 Francisco Street, plus another commercial parcel. It’s near LA Live, two Marriott-branded hotels, the Grammy Museum and Los Angeles Convention Center. 

Douglas Elliman’s Catherine Bassick holds the private listing that is described as entitled to become a “skyline-defining landmark,” in sales materials. There’s no height limit, so that could be true. 

The land could become a mixed-use residential tower with retail space and rooftop amenities, or a hotel or a creative campus for corporate headquarters, if the buyer goes with any of the scenarios laid out in the sales materials.

About that bonus

A couple months ago, Hudson Pacific Properties announced it was cutting two board members, who the company said voluntarily resigned.

“This more efficient board structure maintains the experience needed to guide our management team while contributing to our ongoing focus on corporate costs to drive value creation for shareholders,” chief executive and chairman Victor Coleman said.

That’s the same Coleman who made about $25 million in total compensation, a substantial boost compared to the $8 million or so he made the year before. As The Real Deal previously reported, his base salary remained at $1 million, but his discretionary and non-discretionary cash bonuses and stock awards increased to encourage retention, stockholder alignment and stock price recovery. His stock awards were valued at about $22 million. That was despite ballooning losses that have only continued to mount and shares trading under $3.

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Lenders are looking to sell the debt connected to the Brookfield-owned EY Plaza after a deal to purchase the distressed downtown office tower fell apart. 

Colliers peddled the $275 million non-performing loan in an offering memorandum, stressing “a massive discount to note balance,” while playing up what it called an iconic tower. 

The 41-story, 900,000 square foot property at 725 South Figueroa Street was placed in receivership two years ago after a debt default. The last appraisal put its value at $150 million compared to $446 million when the note was issued. 

That happens to be more than what the office tower would have sold for had Carolwood’s deal closed; Adam Rubin and Andrew Shanfeld’s private equity firm was set to pay $130 million before it fell out of contract. 

Who knows how much the debt will go for now. Downtown is still downtown: office vacancies are at about 33 percent and the return to work hasn’t revived the area.

Hotel on the block

Los Angeles hotels have also seen better days. 

The Hyatt House hotel, located on the University of Southern California’s health sciences campus, is headed to a foreclosure auction.

The Mayer Corporation, developer of the five-story, 200-key hotel at 2200 East Trojan Way, landed a $61.5 million refinancing loan from Westbrook Partners four years ago that it has since defaulted on. 

Entities connected to the Mayer Corporation and Westbrook Partners were in civil litigation after the lender requested a receiver be appointed to take possession of the hotel. The “borrower is in default under the loan and does not wish to continue operating the hotel,” court documents read, arguing that the hotel wasn’t making enough money. 

But the plaintiff requested a dismissal and the court vacated earlier orders days before the notice of trustee’s sale, and the case is now closed.

Buyer wanted

Whole Foods’ Pasadena home is on the market for $75.7 million. But don’t worry, the luxe grocer and its cult favorite berry chantilly cake aren’t going anywhere. The decade left on its lease is a selling point, that and the “affluent” neighborhood that surrounds it, per the listing held by Newmark. 

The seller, an entity connected to the Kutzer Company, purchased the 77,000 square foot property six years ago for $105 million from a private family trust as part of a five-parcel, off-market deal. Before that, it sold for $43.3 million.

If the Whole Foods-leased property at 465 South Arroyo Parkway sells, it’ll fetch more than recorded retail sales in Pasadena during the second quarter. The two priciest sales in Pasadena were the Pasadena Plaza, which sold for $42 million and the Pasadena Playhouse & Lofts, which sold for $9.5 million, according to a CBRE report. 

Tiffany’s to Rodeo

You may see a robin-egg blue storefront on Rodeo in the coming years as French billionaire Bernard Arnault continues to bet on the opulent Beverly Hills corridor. 

LVMH Moët Hennessy Louis Vuitton SE is planning to develop a new Tiffany & Co. shop on the site of an old Luxe Hotel at 360 North Rodeo Drive once it is demolished. Arnault’s conglomerate purchased the hotel for $200 million four years ago. The plans for the jewelry house call for a three-story building that spans 30,000 square feet and include a rooftop indoor-outdoor space. 

Plus, LVMH submitted plans to build a big, new Louis Vuitton store — after voters voted against an earlier proposal for a hotel — and a ritzy campus on Rodeo Drive. Not to mention, a three-story Bvlgari store is opening next month.  

LVMH has spent more than $900 million on 12 leased or owned stores on Rodeo Drive in recent years.

 

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