Lincoln Property defaults on Newport Beach office loan

Landlord owes $21M in unpaid debt on one-time “trophy asset”

Lincoln Property Defaults on Newport Beach Office Loan
Lincoln Property Company David Binswanger and 1500 Quail Street in Newport Beach (Lincoln Property Company, Google Maps)

When Lincoln Property Company bought 1500 Quail Street in Newport Beach in 2018, the company lauded the office building as a “trophy asset,” a “rare opportunity” and a property with “very stable cash flow.” 

Circumstances have changed. 

Lincoln Property defaulted on a $23.3 million loan tied to the 90,000-square-foot building last month, according to a notice of default filed with Orange County. The firm did not respond to a request for comment before publication. 

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The Dallas-headquartered commercial landlord bought the building with an unnamed institutional investor in 2018, paying $32 million, according to property records and an announcement at the time. The firm used the loan from Capital One for the acquisition, and then extended the debt twice. 

Lincoln Property currently owes $20.9 million under the mortgage, according to the notice of default. Capital One can schedule a foreclosure on the building no earlier than June 26, in accordance with California law. 

At 1500 Quail Street, the building is 83 percent leased, down from 90 percent when Lincoln bought the property. 

Many Orange County office buildings have fallen victim to the same factors suppressing office demand — from both tenants and investors — across the country. Remote work has led to companies shrinking footprint and lenders have become hesitant to make loans on office buildings. Rising interest rates have also hurt borrowers with floating-rate loans, as their monthly mortgage payments have skyrocketed. 

Last month, Greenlaw and Walton Street lost an entirely empty, 350,000-square-foot building at 1 City Boulevard West in Orange, signing over the property to TPG Real Estate Finance Trust in a deed-in-lieu of foreclosure, after defaulting on a $64 million loan.