Introduction to One California Plaza Foreclosure
After landing in special servicing due to imminent monetary default last year, Rising Realty Partners’ One California Plaza in Downtown Los Angeles is in foreclosure, according to Trepp.
The Class A office property’s appraised value was slashed 74 percent to around $121 million from $459 million due to “high vacancy and tenant departures,” a Trepp report notes.
Background of the Property
Christopher Rising’s Rising Realty purchased the 42-story office tower at 300 South Grand Avenue in Bunker Hill for $465 million in 2017 with the help of equity partner Colony Capital (formerly Colony Northstar), The Real Deal previously reported. Rising Realty Partners did not respond to a request for comment.
Current State of the Property
Occupancy at the 1,050,000 square foot One California Plaza dropped to about 63 percent this year from 88 percent in 2017 at the time of underwriting. The property saw a sharp fall in net operating income to $9 million in 2024 compared to $17 million the year before. The same can be said for net operating cash flow, which sunk to $7.7 million from $14.6 million during that period, according to Morningstar. The debt service ratio is suspected to be below one, which means the property is not pulling in enough income to cover debts.
Tenants and Leases
Current tenants include AECOM, Watson Morgan Lewis and Nixon Peabody. AECOM, the largest tenant, leases 12 percent of One California Plaza’s space, or about 124,000 square feet; its lease is not set to expire until 2032. The building lost its second biggest tenant, Skadden Arps Slate, who had a lease totaling 10 percent of the space, in November last year.
Market Trends
Downtown offices continue to see distress post-pandemic. Offices in Downtown Los Angeles have an almost 33 percent vacancy rate compared to Greater Los Angeles’ 24 percent, according to a second-quarter CBRE report.
Rising Realty Partners’ History
Rising Realty Partners has had some trouble outside of Los Angeles. Last year, the company handed the keys to a Denver office tower back to the lender in lieu of foreclosure.
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Conclusion
The foreclosure of One California Plaza is a significant indicator of the challenges facing the Downtown Los Angeles office market. With a substantial decline in value and occupancy, the property’s future remains uncertain. As the market continues to evolve, it will be crucial to monitor the developments surrounding this property and the broader implications for the commercial real estate sector.
FAQs
Q: What is the current status of One California Plaza?
A: One California Plaza is in foreclosure due to imminent monetary default.
Q: What is the appraised value of the property now?
A: The appraised value of the property has been slashed to around $121 million, a 74% decrease from its original value.
Q: Who are the current tenants of the property?
A: Current tenants include AECOM, Watson Morgan Lewis, and Nixon Peabody.
Q: What is the vacancy rate in Downtown Los Angeles compared to Greater Los Angeles?
A: Downtown Los Angeles has an almost 33% vacancy rate, compared to Greater Los Angeles’ 24%.
