First Citizens Bank pays more than $1K psf for Santa Monica offices

Nearly a year after defaulting on more than $100 million in loans tied to an office complex in Santa Monica, Realty Bancorp Equities has managed to sell the property — to an untraditional buyer. 

First Citizens Bank and Trust bought the 76,900-square-foot office building at 1540 2nd Street for $86.7 million, records show. Neither First Citizens nor Realty Bancorp responded to requests for comment.

The deal came out to $1,131 per square foot, one of the highest office deal prices on a per-square-foot basis across L.A. County in the last three years. Last year, JPMorgan agreed to buy the 222,000-square-foot Pen Factory complex in Santa Monica for about $745 a square foot. 

Though pricey, the sale still did not cover the debt tied to the building. 

In March, Realty Bancorp, the Woodland Hills-based firm run by Norman Kravetz, defaulted on a $79 million loan from Haymarket Insurance, according to a notice of default filed with L.A. County. A month later, the firm had also defaulted on a separate $30 million loan from the same lender. 

Realty Bancorp had failed to pay property tax installments, part of the debt service payments and put $3.6 million into an interest reserve account, according to the first notice of default. 

The firm built the property in 2006, but refinanced it with larger loans every few years, records show.

Realty Bancorp bought the building from McDonald’s, which is still a tenant, along with CorePower Yoga. The fast-food chain had a right to repurchase the property under the lease, though that right expired in November, records show.

First Citizens, based in Raleigh, North Carolina, grew its assets under management substantially in 2023, when it acquired Silicon Valley Bank after its collapse. The bank assumed $110 billion in assets, $56 billion in deposits and $72 billion in loans in connection with the deal.