Carolwood’s $130 Million EY Plaza Deal Falls Apart

Carolwood’s deal to purchase EY Plaza from Brookfield’s lenders for $130 million fell through, The Real Deal has learned. The Adam Rubin and Andrew Shanfeld-helmed private equity firm’s deal collapsed, and the property is coming back to market, according to a source familiar with the matter.

Servicer commentary via Morningstar Credit, indicated it was “unable to negotiate acceptable documentation with the selected buyer.” A month earlier, the special servicer said a buyer was selected, approvals were obtained and documentation had commenced. The closing had been expected last month.

The deal still would have left Brookfield’s lenders underwater on the $275 million commercial mortgage-backed securities debt connected to the 41-story office tower at 725 South Figueroa Street. It was placed in receivership two years ago after Brookfield defaulted on the debt.

The 900,000-square-foot office property is valued at $150 million, after an appraisal last year, compared to $446 million four years ago when the debt was issued, Morningstar data shows.

Carolwood and Eastdil Secured, who was marketing the property, declined to comment. Brookfield and the receiver did not immediately respond to a request for comment.

The latest status update from the court-appointed receiver read: “Eastdil is now engaged and actively marketing the property for a receiver’s sale. Plaintiff is continuing to evaluate all of its options, including but not limited to foreclosure.”

The office tower’s anchor tenant for which it is named after, Ernst & Young has occupied the property since 1999. The company’s lease encompasses 128,000 square feet, about 14 percent of the total space.

Brookfield has faced significant distress in Los Angeles, particularly downtown, where it has offloaded properties for less than the debt tied to them. It sold 601 South Figueroa Street to Uncommon Developers earlier this summer for $210 million, against a $250 million debt.

Last summer, the Brookfield-owned 777 Tower sold for $120 million in a forced-sale through lenders, which was less than half of the $319 million debt associated with the property.