Fifteen Group buys troubled DTLA apartment portfolio

Laguna Point Properties has offloaded a portfolio of troubled apartment towers in Downtown L.A. that it bought less than a year ago from Barry Shy, The Real Deal has learned. 

The firm sold five buildings to an entity linked to Fifteen Group, an investment and development firm based in Miami, according to March 31 tenant notices obtained by TRD and LLC filings with the California Secretary of State. 

It’s unclear how much the buyer paid for the portfolio, located at 548, 600 and 650 South Spring Street, 111 West 7th Street and 215 West 6th Street. 

Laguna Point Properties declined to comment, while Fifteen Group did not respond to a request for comment. 

The deal closed on March 31, the notices show, a day before the city of L.A.’s new transfer tax went into effect, adding a 5.5 percent tax on all residential and commercial sales of more than $10 million. 

Fifteen Group formed limited liability companies — 215 W 6 Owner, 650 S Spring Owner, 549 S Spring Owner, 111 W 7 Owner and 600 S Spring Owner — on March 23, suggesting the deal came together quickly. 

Laguna Point paid $405 million for the five-building portfolio last year — a purchase that has since become a legal and financial headache for the firm. 

Last month, Laguna Point Properties became delinquent on the $329 million loan it used to purchase the portfolio. 

In a lawsuit against the former owners, Laguna Point has disclosed it has faced a number of issues and defects at the portfolio’s units, which allegedly have caused additional expenses. Barry Shy, a prominent L.A. developer and multifamily landlord, signed the purchase and sale agreement to sell what the lawsuit calls the “Main Premises” to Laguna Point as a manager of one of the LLCs named as a defendant in the suit, Main SB. 

While Laguna Point’s first complaint over the portfolio did not specifically name Shy, or any other individual, as a defendant, it later added him as a defendant. 

The firm also has struggled to fill empty units — occupancy across the portfolio dropped to 87 percent in February from 97 percent when it scored the loan, according to DBRS Morningstar.

Laguna Point also faces threats of litigation from tenants, the firm said in its suit claiming the former owners breached their sale contract.