Big Money Mortgage Defaults
From dwindling mall occupancy at Santa Monica Place to downsizing office tenants on Silicon Beach, commercial borrowers found themselves in hot water as their loans came due in 2024.
Landlords Face Challenges
Landlords in Los Angeles and Orange counties started the year with a bleak outlook: Some $21 billion worth of commercial mortgage-backed security loans and collateralized loan obligations tied to properties in the two counties came due in 2024. And more than half of those loans were already on a special servicing watchlist at the start of the year.
Top Defaults in Los Angeles County
The year’s top defaults in Los Angeles County include retail and multifamily properties, compiled below using Morningstar Data and The Real Deal’s previous reporting. All deals on the list reach a debt threshold of at least $200 million.
Santa Monica Place | Macerich | $300 million
Macerich’s Scott Kingsmore and Santa Monica Place at 395 Santa Monica Place in Santa Monica (Loopnet, Macerich)
Mall owner Macerich relinquished its 527,000-square foot outdoor shopping center, Santa Monica Place, in April after defaulting on a $300 million loan set to mature before the end of the year.
The Bluffs | Edward J. Minskoff Equities | $271 million
Edward Minskoff and The Bluffs at 12121 and 12181 Bluff Creek Drive (Getty, LoopNet)
Edward J. Minskoff Equities was hit with a default notice from its lender, Morgan Stanley, in May after its $250 million loan tied to 12121 and 12181 Bluff Creek Drive in Silicon Beach’s Playa Vista neighborhood came due with an unpaid balance of $271 million.
Ovation Hollywood | Hollywood | $211 million
JEBS Hollywood Entertainment’s Elie Samaha and 6801 Hollywood Boulevard in Hollywood (Getty)
In a troubling sign for Hollywood’s North Highland entertainment hub, a $211.3 million loan tied to the 462,827-square-foot Ovation Hollywood shopping center, previously known as Hollywood & Highland, defaulted in August.
Mandarin Oriental Residences | Shvo & Deutsche Finance | $200 million
Mandarin Oriental Residences Beverly Hills (Mandarin Oriental Residences, Wikipedia/SSHaving, Getty)
Michael Shvo sold 10 luxury condominiums at the newly developed Mandarin Oriental Residences Beverly Hills for an average of $3,200 per foot before the project was hit with a default notice in September.
Conclusion
Commercial borrowers in Los Angeles and Orange counties faced significant challenges in 2024 as loans came due and occupancy rates remained low. Landlords struggled to meet their financial obligations, resulting in defaults and sales of properties at discounted rates.
FAQs
Q: What is the total amount of commercial mortgage-backed security loans and collateralized loan obligations in Los Angeles and Orange counties that came due in 2024?
A: $21 billion
Q: How many of the loans were already on a special servicing watchlist at the start of the year?
A: More than half
Q: Which property did Macerich relinquish after defaulting on a $300 million loan?
A: Santa Monica Place
Q: Who bought the office complex known as The Bluffs after its owner, Edward J. Minskoff Equities, defaulted on its loan?
A: Lincoln Property and Strategic Value Partners
