Special Servicer Grabs Loan for Blackstone-Owned Building

In the latest sign of Los Angeles County’s office market’s slow post-pandemic recovery amid high vacancy and distress, a loan tied to a Blackstone property in Burbank has been transferred to special servicing.

An $87 million commercial mortgage-backed securities loan linked to Blackstone and Worthe Real Estate’s building at 3300 West Olive Avenue is now in the hands of a special servicer as default appears imminent, Commercial Observer reported, citing a report from Morningstar. The Wells Fargo-originated debt is slated to mature in June.

Blackstone acquired its stake in the 225,000-square-foot structure, known as Pinnacle II, in 2017 as part of a six-property deal in Burbank’s Media District for $1.7 billion. The individual price of the property is not known.

While other buildings in the portfolio housed entertainment companies like DreamWorks, the Walt Disney Company and Sony, Pinnacle II has had a rough past few years. Warner Brothers was the only occupant in the building until 2022 when it vacated the site ahead of its lease expiration late that year. Since then, the building has largely been gathering dust, and its net cash flow has been negative since 2023, per Morningstar data cited by CO.

A new undisclosed tenant is planning to move into Pinnacle II this summer, though the deal is only for approximately 25 percent of the building’s available space.

Soundstage and creative office owners in Greater Los Angeles have been hurting since the 2023 actor and writer strikes that ground film and TV production to a halt. At the same time, productions have fled Los Angeles for cheaper filming locations, though state officials are hopeful for a comeback after beefing up its Film & Television Tax Credit Program incentives to $750 million last year. Earlier this month, Hackman Capital Partners defaulted on $1.1 billion in debt tied to Radford Studio Center, one of the city’s oldest lots, located a few miles west of Pinnacle II in Studio City. Hackman is expected to return the 1.2-million-square-foot lot to lender Goldman Sachs.

— Chris Malone Méndez