The Santa Monica Clock Tower is playing for time.
Rockwood Capital-owned building at 225 Santa Monica Boulevard–once the city’s tallest skyscraper,has landed in special servicing and was recently appraised at $27.4 million compared to $49 million at loan issuance, according to Morningstar Credit.
That’s a 44 percent decline in around a decade — and that means the 53,500-square-foot, century-old, 12-story Art Deco office tower is worth less than its purchase price but not less than the debt tied to it.
The $26.7 million commercial mortgage-backed securities loan connected to the offices went to special servicing after missing a May maturity date. But “with a value above the outstanding balance and a borrower who remains ‘responsive’ per the servicer’s commentary, there could be a window for a modification,” according to Morningstar.
Rockwood Capital did not immediately respond to a request for comment.
The company purchased the property for $58 million in 2019 from Sorgente Group of America. The Italian investors purchased it about six years earlier for around $34 million.
The clock tower, a local landmark constructed in the late 1920s that looks to the Pacific Ocean, has seen its occupancy and net operating income crash. Occupancy declined to 43 percent in March this year compared to 100 percent at loan underwriting ten years ago; income dropped to about $144,000 from $2.2 million during the same period, the latest Morningstar data revealed. It has a debt service coverage ratio of 0.38x, so the property is not bringing in enough money to pay off debts.
Santa Monica has a 24 percent office vacancy rate, which isn’t much higher than all of West Los Angeles, which has a 22 percent vacancy rate. But it is much higher than Century City’s 12.8 percent. Plus, Santa Monica has the most office buildings in all of West Los Angeles in a post-pandemic era that still hasn’t seen an office sector revival.
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Commercial
Los Angeles
Santa Monica Clock Tower’s loan lands in special servicing
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