Rising Realty Partners’ One California Plaza in Receivership

One California Plaza was placed in receivership after Rising Realty Partners and DigitalBridge defaulted on $300 million in commercial mortgage-backed securities debt that has since been reclassified to foreclosure.

A lender requested a receiver be appointed to take possession of the 1 million-square-foot, 42-story office tower downtown, and a judge agreed. The court-appointed receiver, Trigild, now has control of the property. But the receiver can’t sell without a court order.

Rising Realty and DigitalBridge (formerly Colony Capital and earlier Colony Northstar) purchased the office tower, at 300 South Grand Avenue, for $465 million eight years ago. The property is now worth less than the debt tied to it and its past price: an appraisal earlier this year put its value at $121 million, according to Morningstar Credit. The court documents noted the lender believed the borrower intended to consent to the appointment of a receiver.

The special servicer, in support of a court-appointed receiver, wrote that the One California Plaza owner and debt borrower failed to make payments, and the property isn’t making enough money to pay off debt, plus operating expenses. Occupancy declined to about 63 percent this year compared to 88 percent at underwriting, according to Morningstar Credit. Income fell to $9 million in June 2024 from $17 million in December 2023, the latest data available shows. In an earlier commentary, the servicer said it planned to commence foreclosure proceedings or seek receivership.

The court did not specify who at Trigild would be the receiver, but US Bank, on behalf of the loan holders, requested Chris Neilson. Any opposition needs to be filed next month. Attorneys for the landlord, borrower and lender and the receiver did not respond to a request for comment.

Downtown Los Angeles offices have an almost 33 percent vacancy rate and are still suffering post-pandemic as tenants flee to more desirable locations with ample amenities to entice workers back to their desks.