Bunker Hill tower One California Plaza goes into receivership

"One California Plaza - the gleaming 42-story tower on Bunker Hill that was one of the most prestigious addresses in the city when it opened in the 1980s - has dropped 74% in value from its market peak. Earlier this year, the owners defaulted on their $300-million debt, set to mature in November, and faced foreclosure. At the request of lenders, a judge appointed Trigild, a receivership service, to take control of the 1 million-square-foot property, the Real Deal reported."

"One California Plaza is appraised at $121.2 million, down from $459 million in 2013, according to a Morningstar Credit report, real estate data provider CoStar said. Net cash flow at the property trailed expectations by 37% last year, and the building is now 62% leased after the departure of major tenants, including law firm Skadden, Arps, Slate, Meagher & Flom, which is set to relocate to Century City."

"In recent years, the downtown office market has shifted against landlords as many tenants have reduced their office footprints in response to the COVID-19 pandemic, when it became more common for employees to work remotely. Elevated interest rates recently have weighed on prices by making it difficult for building owners to refinance debt, pushing them into quick sales or foreclosures. Some downtown L.A. office tenants have expressed concern that the streets feel less safe than they did before the pandemic and have left for other local office centers, including in Century City."

One California Plaza, a 42-story downtown Los Angeles office tower, has entered receivership after owners defaulted on a $300-million loan and faced possible foreclosure. Appraisal value fell to $121.2 million from $459 million in 2013, and net cash flow lagged expectations by 37% last year. The building is about 62% leased after major tenants, including law firm Skadden, Arps, Slate, Meagher & Flom, announced departures. Lenders asked a judge to appoint Trigild to manage the 1 million-square-foot property. The downtown office market faces pressure from remote-work-driven reduced footprints, higher interest rates that hinder refinancing, and tenant safety concerns.

Read at Los Angeles Times