EY Plaza Deal Collapases

Carolwood’s deal to purchase EY Plaza for $130 million fell through. The office tower is coming back to market, a source familiar told The Real Deal.

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

The sale to the Adam Rubin and Andrew Shanfeld-led firm still would have been less than the $275 million commercial mortgage-backed securities debt connected to the 41-story office building that was placed in receivership two years ago after Brookfield missed payments — and less than the 900,000-square-foot office property’s latest value: $150 million. The office tower was once valued at $446 million four years ago.

To receive, or not to receive

The Rising Realty Partners-owned One California Plaza could be placed in receivership after defaulting on $300 million of CMBS debt, if the court agrees to the lender’s request.

On behalf of the loan holders and through a special servicer, US Bank requested a receiver be appointed to take possession of the foreclosed, 1-million-square-foot office tower downtown and collect rents, according to a complaint filed in the Superior Court of Los Angeles County. The complaint notes that the plaintiff believes the borrower intends to consent to the appointment of a receiver.

Christopher Rising’s company and Colony Capital purchased the office tower at 300 South Grand Avenue for $465 million eight years ago. But the 42-story, Bunker Hill office property is now worth less than the debt connected to it and less than its purchase price. A recent appraisal put its value at about $121 million, compared to $459 million at loan issuance in 2017.

Post-pandemic occupancy is down at the property to about 63 percent this year compared to 88 percent at underwriting.

“Borrower is in default under the loan documents and is depriving plaintiff of its interest in the rents, causing material, immediate and irreparable damage to plaintiff,” the complaint reads. It later notes: “unless a receiver is appointed, plaintiff will suffer great and irreparable damage.”

Value haircut

Realty Bancorp’s Los Angeles County office portfolio ran into some more trouble. After the roughly $67 million in CMBS debt connected to the five-property portfolio landed in special servicing, the borrower became delinquent, with the offices worth less than half as much as it was at underwriting six years ago.

The 346,800-square-foot portfolio, located throughout Aguora Hills, Woodland Hills and Calabasas, was recently appraised at $47.8 million compared to $101.6 million in 2019.

One of the Aguora Hills properties was home to the Los Angeles Rams for nine years, but the team’s billionaire owner, Stan Kroenke, moved the headquarters, part of a $10 billion development plan at Warner Center in Woodland Hills. Total occupancy declined to 72 percent at the end of June from 98 percent at underwriting six years ago — and the office buildings are not bringing in enough money to pay off the debt.

The latest servicer commentary notes that the borrower is requesting a short term forbearance, or a temporary suspension of loan payments for a set period, which the special servicer is reviewing.

Hundreds of million in bonds

One Beverly Hills could receive up to $550 million in bond financing, after the Beverly Hills City Council gave developers Cain International and OKO Group the greenlight to allot a Community Facilities District.

That means of the $550 million special taxes, $390 million would be used to fund public improvements and $160 million would be allocated for “future city council to fund major repairs or enhancements to the public improvements decade from now without needing to revisit voter approvals,” according to a presentation at the council meeting.

The 17.5-acre mixed-use development is set to include an Aman resort, two condominium towers and the renovation of Beverly Hilton hotel. Development is underway after the city council approved the plan in 2021, and the project is anticipated to be completed three years from now. Revenues would then be used to repay the bonds.

“The CFDs really act like takeout financing,” Cain’s managing director said at the council meeting. “It is not a gift or a subsidy. There is no financial risk to the city, and there is no impact to the existing taxpayers outside of the CFD.”

Mega-project moves

More development news out of the opulent Beverly Hills: the city planning commission voted in favor of Saks Fifth Avenue parent company Saks Global’s 3.7 acre mixed-use development. The approval came despite criticism during the public hearing, and with some amendments to logistics such as an area for pedestrians to walk and retail and restaurant space.

“At the last meeting, there were questions about the retail and restaurant distribution. To clarify this issue and move the project forward, we’re prepared to accept a limit of 15,088 square feet of restaurant use, as shown on the concept plan, exclusive of the hotel and private club,” Douglas Adams, senior vice president of Saks’ real estate development arm, said during the August meeting.

The plan calls for 76 apartments, a boutique hotel, a spa, a social club, 45,000 square feet of offices and 64,000 square feet of retail — and is designed by Marmol Radziner. It is expected to take more than four years to complete.

Hollywood refi

Hackman Capital Partners and Affinius Capital secured a three-year, $165 million financing package for Raleigh Studios. The financing will be used to repay $135 million of existing debt.

Netflix leases most of the 314,940-square-foot Hollywood film studio as a hub for some of its biggest-budget deals that include production companies owned by Former President Barack Obama and former First Lady Michelle Obama, Prince Harry and Meghan Markle and Shonda Rhimes — the woman who gave the world Grey’s Anatomy. The streaming giant is about halfway through a 10-year lease.

Hackman, Affinius, and Raleigh Enterprises are all owners: Hackman holds a 36 percent stake, Affinius 34 percent and Raleigh Enterprises 30 percent, though the latter has owned the property since 1979.