Mezzanine lender on Gas Company Tower wants a say in receivership

Meritz asks to intervene in Brookfield case to “protect its position in the capital stack”

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Meritz Alternative Investment Management's Jun Hyun Shin and Trident Real Estate's Gregg Williams with The Gas Company Tower (Colliers, LinkedIn, Trident Real Estates)

A mezzanine lender on the Gas Company Tower wants a say on the future of the 52-story building, which is owned by Brookfield Properties in a receivership. 

Meritz Alternative Investment Management, based in South Korea, has asked to intervene in the receivership, according to a court filing. 

The lender wants to “protect [its] position in the capital stack and its financial interest,” Meritz said in the filing. It wants a “seat at the table in all future legal proceedings regarding the property.” 

Ocean West Capital Partners, which is acting as a U.S. advisor to Meritz, did not respond to a request for comment. 

Meritz holds a $65 million mezzanine loan on the tower, located at 555 West 5th Street, according to court records. The lender took over the loan from Morgan Stanley and Citi Real Estate Funding, which originated the mezzanine debt in addition to a $350 million senior loan. That senior portion was then packaged into a commercial mortgage-backed securities loan — a loan Brookfield defaulted on last year, prompting the receivership. 

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Meritz wasn’t the only mezzanine lender. An entity tied to Principal Real Estate Investors and the Florida Retirement System Trust Fund also provided a $50 million mezzanine loan, according to court records and filings with the U.S. Securities and Exchange Commission. 

When Brookfield defaulted on the senior loan, it triggered a default with Meritz’s mezzanine loan, Meritz said in its filing.

The Gas Company Tower is currently up for sale, after receiver Gregg Williams at Trident Real Estate tapped JLL to market the property. 

Under the deal, JLL would get a “success fee” if the property sells. If it trades 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. 

The City of Los Angeles was in negotiations to lease 300,000 square feet at the building, but the deal is apparently off the table: Williams filed a motion with the court to withdraw a request to authorize the lease in March.

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