The 21-story Wedbush Center in Downtown Los Angeles was recently appraised at $60.5 million compared with a $197.5 million value at loan issuance, according to Morningstar Credit.
That’s a 69 percent decline in around seven years.
The Class A building–which faces the stretch of the 110 Freeway that cuts through the city’s center–is worth less than half the $128 million commercial mortgage-backed securities debt balance connected to the Cerberus Capital Management-owned building. The private equity firm purchased the 475,000-square-foot office building at 1000 Wilshire Boulevard for $196 million from Lincoln Property Company in 2018.
Cerberus Capital Management did not respond to a request for comment.
The debt landed in special servicing after Cerberus Capital Management missed its March maturity amid plummeting occupancy, an issue for a lot of Downtown office towers. Occupancy at the Wedbush Center dropped to 67 percent at the end of last year compared to 87 percent at loan underwriting.
A special servicer is reviewing resolution alternatives, according to Morningstar. But things could soon get worse as the building’s name tenant, its largest, plans to vacate once its lease expires at the end of the year. Wedbush Securities is ditching 100,000 square feet Downtown for a smaller space in Pasadena, ending a more than 20-year residency at the building under multiple owners.
“It’s a big deal, a very big decision for the firm,” chief executive and president Gary Wedbush said then. “The pandemic and COVID created a different kind of office for us. There are places like Pasadena that seem to have recovered more fully from the pandemic than Downtown Los Angeles has. That was a part of the decision-making.”
Downtown Los Angeles currently has an office vacancy rate of nearly 33 percent. Tenants are fleeing to places such as Century City, where they can entice workers back to their desks with offices that have ample amenities and where homelessness is less of a concern.
Pasadena, meanwhile, also has seen some distress in its office sector. A nine-story office tower in the San Gabriel Valley city saw its value slashed in half after a recent appraisal and a two-building complex recently sold at a deep discount.
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Commercial
Los Angeles
Wedbush Securities to leave namesake building in DTLA for Pasadena
Commercial
Los Angeles
DTLA’s Wedbush Center to special servicer as namesake tenant relocates to Pasadena