Ovation Hollywood, a 387,000-square-foot office-retail hub along the Hollywood Walk of Fame, has lost a quarter of its value since the pandemic.
The five-story center at 6801 Hollywood Boulevard best known as Hollywood & Highland was appraised at $257 million, 24 percent less than its $338 million value in 2019, Bisnow reported, citing Morningstar.
The U.S. arm of Hong Kong-based Gaw Capital Partners and DJM Capital, based in San Jose, bought the 7.6-acre outdoor mall in 2019 for $325 million, The Real Deal reported.
Gaw and DJM then poured another $100 million into renovations, completed in 2023, while stripping it of its original Babylon theme.
Located at Hollywood Boulevard and Highland Avenue, the retail complex was once among the busiest draws in Hollywood.
But the office mall was moved to special servicing in June ahead of its August maturity date on a $211.3 million commercial mortgage-backed securities loan secured by the property, according to Morningstar.
When Gaw and DJM took out the loan in 2019 with the purchase of Hollywood & Highland, tenant occupancy was 90 percent, according to Bisnow. By 2023, occupancy had dropped to 77 percent.
By December, the number of stories and offices with the lights on had fallen to 69 percent.
Nonetheless, Morningstar said that despite the occupancy drop-off, the property’s net cash flow improved last year, surpassing “issuance level” cash flow by 6 percent. The reason for the uptick in revenue was not disclosed.
Hollywood & Highland, which opened in 2001, was developed by Chicago-based TrizecHahn, and sold three years later to locally based CIM Group for $200 million.
Last fall, the home of the Academy Awards, considered part of the Hollywood & Highland complex, changed hands.
In October, Jebs Hollywood Entertainment, an investor group led by movie producer Elie Samaha, bought the 3,400-seat Dolby Theatre for $50 million. The seller was the California Public Employees’ Retirement System, a public pension fund also known as CalPERS.
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