BH Properties offers $10M to bankrupt Oceanwide Plaza to keep lights on

BH Properties, the lending firm run by Steve Gozini, has offered a $10 million lifeline to Oceanwide Plaza to help the bankrupt project stay above water for the next few months.

China-based Oceanwide has requested the bankruptcy court overseeing its Chapter 11 reorganization approve $10 million in debtor-in-possession, or DIP, financing from BH Properties, according to a court filing last week. 

DIP financing allows a business to keep operations running as it navigates its bankruptcy filings. 

A group of contractors forced Oceanwide into bankruptcy in February, court records show, alleging Oceanwide owes about $400 million on the unfinished project in Downtown Los Angeles. Oceanwide has spent about $1.2 billion on the roughly 2 million-square-foot condo, office and residential project at 1101 South Flower Street, though it has sat idle since 2019. The structure has since gone viral, after people scaled the tower and graffitied almost every floor. 

But Oceanwide doesn’t need money to pay creditors. It needs money to keep the lights on for the time being — $7.3 million in the next 13 weeks, to pay for security, financial advisors and legal services, according to a court filing. 

BH Properties offered the one-year loan to Oceanwide as a revolver, meaning the firm can tap the financing in tranches or all at once, according to the filing. Oceanwide had reached out to 20 prospective lenders, according to court filings, though only two provided term sheets.

BH Properties did not respond to a request for comment. 

Oceanwide will pay a minimum interest rate of about 8.5 percent, according to a financing term sheet filed with the court. But the borrower won’t pay interest until the loan matures, or if it defaults. In the case of a default, Oceanwide will have to pay 18 percent in interest on the loan. 

The property is also officially up for sale, with Colliers and Hilco Real Estate hired as marketing brokers. If a sale goes through, BH Properties will be paid using those proceeds. 

If Oceanwide is not able to obtain the $10 million loan, it “would not have sufficient available sources of working capital and would be unable to administer its estate, pay its operating expenses or maintain its assets,” Oceanwide said in a court filing. 

It also needs DIP financing to pay for general liability insurance, which Oceanwide only bought in March. 

The bankruptcy court still needs to approve the financing. 

BH Properties has been focused on handing out DIP financing, mezzanine loans and receivership financing since 2020, when it formed a $200 million distressed real estate fund. 

Last year, the firm teamed up with L.A.-based Hankey Capital to lend $75 million to Joel Schreiber’s Waterbridge Capital on its acquisition of the 40-story Union Bank Plaza in Downtown Los Angeles. BH Properties held a more junior position on that loan.