A foreclosure auction for Coretrust’s 444 South Flower tower in Downtown L.A. has been delayed, The Real Deal has learned.
Oaktree Capital, a mezzanine lender on the property, in September pursued a UCC foreclosure auction for equity interests in the tower, with an auction set for Nov. 18.
The auction will now be held in December, according to a source familiar with the matter. A UCC foreclosure allows the parties to bypass court, and often mezzanine lenders will bid on the property using their loan amount as currency.
Oaktree declined to comment. A representative for Coretrust did not immediately respond to a request to comment.
Coretrust bought the 48-story property for $336 million in 2016, records show, and scored a $259 million refinancing package from American General Life Insurance and American Home Assurance, two AIG subsidiaries.
Oaktree held a $107 million mezzanine loan on the property when it pursued the foreclosure. No notice of default has been filed with L.A. County yet and it’s unclear why the loan went into default.
The auction was the first sign of distress across Downtown L.A.’s office market. Few office towers have sold in recent months, as high vacancy rates and a lackluster return to the office have chilled sales.
Two potential sales for office properties in Downtown L.A. are linked to Joel Schreiber, the first investor in WeWork. Earlier this year, he struck a deal to buy the 40-story Union Bank Plaza for $155 million — $95 million less than seller KBS was asking for the property in 2021. But KBS recently said it cannot guarantee that the sale will go through.
Also Schreiber is trying to sell Broadway Trade Center through a Chapter 11 bankruptcy, but recently a sale to Quintin Primo of Capri Capital Partners fell apart after Primo did not put down a deposit.
Keith Larsen contributed reporting.