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Terra Property Trust defaults on Santa Monica office building
Loan for $28M tied to leasehold interest in 100K sf property on Ocean Avenue
Terra Property Trust has defaulted on a loan tied to the leasehold interest in 1733 Ocean Avenue, a 100,000-square-foot office building in Santa Monica, The Real Deal has learned.
The New York-based firm owed $28.3 million under a Centennial Bank-issued loan as of June 30, according to a notice of default filed with L.A. County.
Centennial gave Terra a $34 million loan in 2018, though terms were not disclosed, property records show. Neither Terra nor Centennial responded to requests for comment.
The default is a full-circle moment for Terra, which acquired the leasehold interest in the property through a foreclosure in 2018, according to filings with the U.S. Securities & Exchange Commission.
Terra gave out the original loan on the property in 2014, but foreclosed after Maguire Investments, founded by the late developer Robert Maguire, defaulted on the $54 million loan, records show.
Goldman Sachs owns the land under the property, paying $65 million for it in 2019, according to an announcement from brokerage Madison Partners at the time.
Terra and Goldman Sachs have been fighting over the terms of the ground lease since 2020, according to court records. Under the ground lease, base rent is reset every five years, which is either calculated as 9 percent of the fair value of the land or the annual base rent for the prior year, whichever is greater.
“We are currently litigating with the landlord with respect to the appropriate method for determining the fair value of the land for purposes of setting the ground rent,” Terra said in its 2022 annual report. The next rent reset on the ground lease is set to happen in November 2025.