Onni Group is in trouble over its $408 million loan connected to the Wilshire Courtyard office complex on the Miracle Mile, The Real Deal has learned.
The commercial mortgage-backed securities loan from Natixis has been sent to special servicing, ahead of its expected expiration in July, according to data from Trepp and Morningstar Credit Information and Analytics. Onni Group did not respond to a request for comment.
Onni has an option to extend the loan by another year, according to the Morningstar data. However, this option requires the building’s income to be 1.1 times the monthly debt service — a requirement Onni is not currently achieving, therefore triggering the special servicing.
Onni bought the 1 million-square-foot office complex at 5750 Wilshire Boulevard for $630 million in 2019, taking it from the hands of Tishman Speyer. Months later, it scored WeWork as an anchor tenant, occupying about 32 percent of the space — a deal hailed as a win for Onni, given WeWork’s $47 billion valuation at the time.
The same year, Onni negotiated the CMBS loan and a $69.4 million mezzanine loan from Brookfield, according to a report from DBRS Morningstar.
But the timing was inopportune. WeWork co-founder Adam Neumann was ousted as CEO a few months later after a failed attempt to take the company public. By 2022, WeWork had vacated its entire 335,000-square-foot lease.
At the end of 2022, the campus was about 46 percent vacant and the firm reported net cash flow of $20 million — down from $30.2 million when the CMBS loan was issued, according to Morningstar data.
Tenancy at the property, and therefore income, has been a rollercoaster since then.
In January, Sony Pictures signed a deal to lease 225,000 square feet at the building — a major boost for the property.
But three months later, the loan’s special servicer said two major tenants — Media Brands Worldwide and Sky Dance Media — were expected to vacate the property once their respective leases expire later this year. Together, the two had occupied 165,000 square feet of space. Neither company responded to requests for comment.
However, unlike many office owners with floating rate debt, Onni has been feeling less of the pain that has come with rising interest rates, given it purchased a rate cap when it secured the loan in 2019.
Onni has been paying an interest rate of 3.75 percent on the loan since July of last year, loan data shows, coming out to about $1.3 million a month interest or $15.6 million a year.