Rising Realty Partners has gone into special servicing for a $300 million loan linked to a 42-story office building in Downtown Los Angeles.
The locally based investor went into special servicing for its One California Plaza tower at 300 South Grand Avenue, in Bunker Hill, Bisnow reported, citing Morningstar.
The commercial mortgage-backed security loan for the 1 million-square-foot skyscraper is set to mature in November.
The building now known as 1 Cal Plaza has faced an uphill financial battle. In 2021, it went into special servicing “for a cash management issue that was ultimately settled,” according to Morningstar.
Last year, the net cash flow for the property was 37 percent below the underwritten amount. Occupancy, a common problem for commercial offices since a pandemic shift to remote work, has been a challenge.
Law firm Skadden is set to vacate its 100,000-square-foot offices at 1 Cal Plaza this year after inking a deal for about half that size in Century City. Once Skadden is out, occupancy will drop to 63 percent, Morningstar reported.
Some 20 percent of all office loans in Los Angeles were slated to mature between last year and 2025, according to a previous Morningstar report, which estimated that $1.8 billion in CMBS debt was slated to come due this year alone.
“The overwhelming share of those [properties] are going to be facing a significant amount of lease rollover and/or current vacancy,” Moody’s Analytics Director of CRE Economics Matt Reidy told Bisnow last year.
One California Plaza was built in 1985 next to its twin Two California Plaza as part of the “urban renewal” of Bunker Hill.
Rising Realty bought the building in 2017 for $460 million, or $460 per square foot.
This week, Southern California Gas inked a deal to lease nearly 200,000 square feet on eight floors at the 52-story 2 Cal tower at 350 South Grand Avenue. The relocation from its long held home at the Gas Company Tower at 555 West 5th Street is slated by spring 2026.
Terms of the deal with Mid-Wilshire-based CIM Group, owner of the building, were not disclosed.
Rising Realty Partners, founded in 2012 by the late Nelson Rising and his son, Christopher, has $1.7 billion in commercial real estate assets under management, including 6.4 million square feet of properties, according to its website.
In June last year, Rising Realty and Lionstone Investments sold a 300,000-square-foot, 11-story Art Deco building at 433 South Spring Street in Downtown L.A. for under $40 million, or less than $133 per square foot. The buyer of The Trust Building was UCLA.
— Dana Bartholomew
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