A Los Angeles Default and Sale
Introduction to Los Angeles Real Estate
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 high-water 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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Conclusion
The Los Angeles real estate market has seen its fair share of defaults and sales in recent times. From the beachfront mixed-use property that was once home to Snapchat to the apartment building featured on the Eagles’ Hotel California album back cover, each property has its own unique story to tell. Laeroc Partners is fighting back against Cathay Bank’s claims of default, while Banc of California has inked a new lease deal and acquired naming rights for a downtown building. EY Plaza, on the other hand, has taken another value haircut and is awaiting a potential sale. As the market continues to evolve, it will be interesting to see how these properties and others like them fare in the future.
FAQs
Q: What is the current state of the Los Angeles real estate market?
A: The Los Angeles real estate market has seen a mix of defaults and sales in recent times, with some properties selling for less than their prior purchase price and others facing foreclosure auctions.
Q: What happened to the beachfront mixed-use property that was once home to Snapchat?
A: The property sold for $30.7 million, which is less than its prior purchase price of $40.5 million in 2014.
Q: What is the status of Laeroc Partners’ dispute with Cathay Bank?
A: Laeroc Partners is denying all allegations of default and is asking that the complaint be dismissed with prejudice, with Cathay Bank covering all legal costs.
Q: What is the significance of Banc of California’s new lease deal and naming rights acquisition?
A: Banc of California has inked an 11-year lease for 40,000 square feet at 865 South Figueroa Street and has acquired naming rights for the building, which will now be known as the Banc of California Tower.
Q: What is the current status of EY Plaza?
A: EY Plaza has taken another value haircut, this time by 10 percent to $135 million, and is awaiting a potential sale.
