Greenlaw, Walton Street delinquent on Orange office tower loan

Owners tried to sell the empty building last year for $100M

Greenlaw, Walton Street Delinquent on OC Office Tower Loan
Walton Street Capital co-founders Eric Mogentale, Jeffrey Quicksilver, Greenlaw Partners founder Wilbur Smith and City Plaza at 1 City Blvd West (Walton Street, Greenlaw, Google Maps)

Walton Street Capital and Greenlaw Partners are delinquent on a loan tied to an office tower in Orange — a property the firms had tried to sell in February 2022. 

The companies are 30 days delinquent on a $62.7 million loan tied to 1 City Boulevard West, according to data from Trepp. The loan has been sent to special servicing.

The 350,000-square-foot building has been empty and entirely available for lease since at least February 2022, according to LoopNet listings. Neither Greenlaw nor Walton Street responded to requests for comment.

TPG RE Finance Trust originated the loan in 2019 and packaged it into a collateralized loan obligation, or CLO. The loan is tied to one-month Libor, with a rate cap of 5.55 percent, according to Morningstar. It was set to mature in August 2021, but the borrowers have scored three one-year extensions. 

Walton Street and Greenlaw bought the property in 2013, as part of a $110 million deal for the building and a 10-acre office site in Irvine. Walton Street owns a 95 percent stake in the property, while Greenlaw holds the remaining 5 percent. 

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The firms listed the building for sale in early 2022, with an asking price of $100 million, or $285 per square foot. The city of Orange, wedged between Anaheim and Santa Ana, has a central position within Orange County.

Office building values have eroded since then. McKinsey has estimated price drops of up to 42 percent by 2030, compared to 2019 valuations, in the most severe case. 

The delinquency comes as Greenlaw is actually buying more office buildings — at steep discounts.

Last month, the firm spent $58 million to buy a 315,000-square-foot tower at 2050 Main Street in Irvine for $57.5 million, or $182 per square foot. The seller, AEW Capital Management, ​​bought the property in 2011 for $108.5 million, or $345 per square foot.

Greenlaw has also been intertwined with an FBI probe into corruption in Anaheim city government. Greenlaw was found to be one of two “preferred developers” that was “friendly” with former Mayor Harry Sidhu, who resigned last year amid the probe, a third-party investigation found