Lenders Look to Sell Off Debt on EY Plaza

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.

Introduction to the Debt Sale

The sale of the debt connected to EY Plaza is a significant move, given the current state of the downtown office market. With vacancies at an all-time high, lenders are looking to cut their losses and offload the non-performing loan.

Hotel on the Block

Los Angeles Hotels See Better Days

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.

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.

Buyer Wanted

Whole Foods’ Pasadena Home for Sale

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.

Tiffany’s to Rodeo

LVMH Moët Hennessy Louis Vuitton SE Expansion

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.

Conclusion

The sale of the debt connected to EY Plaza and the potential foreclosure of the Hyatt House hotel are just a few examples of the challenges facing the Los Angeles real estate market. With office vacancies high and the return to work slow, lenders and developers are looking to cut their losses and offload non-performing loans.

FAQs

What is the current state of the downtown office market?

The downtown office market is currently facing high vacancies, with office vacancies at about 33 percent.

What is the value of the debt connected to EY Plaza?

The debt connected to EY Plaza is valued at $275 million.

What is the plan for the old Luxe Hotel on Rodeo Drive?

The old Luxe Hotel on Rodeo Drive is set to be demolished and replaced with a new Tiffany & Co. shop.

How much did LVMH Moët Hennessy Louis Vuitton SE spend on Rodeo Drive stores?

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

Read more

Can California real estate ever forgive its politicians?

Amgen plans $600M R&D facility at Thousand Oaks HQ

SEC renews 58K sf DTLA office lease amid DOGE cost-cutting efforts