Two months before WeWork scrapped plans for its initial public offering, Onni Group secured the co-working giant as a high-profile first tenant following its $628 million acquisition of the Wilshire Courtyard office complex. But that 335,000-square-foot lease is now causing problems with lenders.
Onni is now in default on the $408.2 million CMBS loan for the massive property, according to servicer commentary reported by Trepp. The Canadian developer “entered into an amendment of the WeWork lease without lender’s prior written approval, as required by the loan agreement,” the servicer said.
Onni did not respond to a request for comment. The 1 million-square-foot Mid-Wilshire complex encompasses 5700 and 5750 Wilshire Boulevard.
Natixis financed Onni’s acquisition of the complex last July with a three-year, $408 million floating-rate mortgage and a $69 million mezzanine loan, according to loan documents for the single-asset NCMS 2019-MILE CMBS deal which closed in Dec. 2019.
WeWork first signed a 15-year lease for 158,663 square feet at Wilshire Courtyard in July, adding another 176,723 square feet in September, all in the 5750 Wilshire Boulevard building.
The company’s initial base rent is about $57 per square foot, according to loan documents, with a total tenant improvement allowance of about $119 per square foot or $39.9 million in total. WeWork provided a parent company lease guarantee of up to $17.9 million, as well as two letters of credit totalling $15.3 million.
WeWork took possession of the space in November, and was expected to begin paying rent for the original lease space last month, and the additional space in August — before coronavirus interfered with those plans, it appears.
The co-working firm is the largest tenant at the complex, occupying about 32 percent of the space. Other major tenants include Mediabrands Worldwide and Twentieth Century-Fox Television.
Vancouver-based Onni is an active player in Los Angeles real estate. The developer filed plans last week for a 14-story office tower in Hollywood, and has also unveiled new plans for a two-building mixed-use complex in the Arts District.
Contact Kevin Sun at [email protected]