The Gas Company Tower in Downtown Los Angeles is almost officially up for grabs. And it could sell to the City of Los Angeles.
Gregg Williams at Trident Real Estate, the receiver on the building, has hired JLL to market the 52-story tower at 555 West 5th Street for sale, subject to court approval, according to a court filing last week.
Under the deal, JLL would get a “success fee” if the property is sold. If it sells for between $150 million and $194.99 million, JLL will get 0.5 percent. If the tower sells for $220 million or more, JLL will get 0.8 percent.
JLL will see less reward if the building sells to the city or Los Angeles County — a flat 0.5 percent fee. The City of Los Angeles, which has been in negotiations to lease the building, has expressed interest in buying it, according to the filing, as have other “potential buyers.”
An L.A. Superior Court judge appointed a receiver on the property last year, after Brookfield defaulted on $350 million in loans on the building and the CMBS bondholders on the debt filed a lawsuit requesting the receivership.
A receiver has the power to market the property for sale, with the help of a brokerage, though the court has to approve any sale and all broker fees. Williams signed an agreement with JLL brokers Jeffrey Bramson, Andrew Harper and Will Poulsen, according to the filing.
Williams asked the court to approve the listing agreement before August — when the court is currently scheduled to hear next motions — so JLL can begin marketing the building for sale imminently.
“Significant irreparable harm will result if the parties were required to wait until August 2024 to list the property,” Williams’ attorneys said in the court filing.
“Significant currently-available opportunities may be missed, the optimum marketing window will be missed,” the filing said, adding that there may be more “competition” coming to market later this year.
That competition would consist of other office buildings that “are likely to default” later in 2024 or early 2025 and would “hit the market as distressed property sales.”
The CMBS bondholders may also be more likely to pursue foreclosure if the property is not listed promptly. Williams said the building is likely to sell at a higher price on the open market, rather than a foreclosure.
The City of L.A. is still in negotiations to lease 300,000 square feet at the property, according to the filing. That’s a reason to list it as soon as possible, given the lease would boost the property’s value.
“Whether the CoLA lease opportunity will still be an option in late July or August is uncertain at best, however, as the city may need to secure alternate office space in the meantime,” the filing said.