A lender and special servicer, on behalf of commercial mortgage-backed securities holders, requested a court-appointed receiver for an Orange County office campus.
The parties alleged the borrower defaulted on their loan and said the amount owed was in excess of $17 million, according to a complaint filed earlier this year. Wells Fargo originated the note, and K-Star Asset Management is the special servicer.
The property in question is a three-building office park on Garden Grove Boulevard in Westminster, which saw its value decline to $16.4 million, compared to $27.7 million at loan issuance six years prior, per Morningstar Credit and Trepp recent alerts. That represents a 41 percent decrease.
The haircut came after the borrower, an entity connected to Younan Properties, defaulted on the loan, which was moved to special servicing late last year, per Morningstar Credit and Trepp. The office campus at 5405, 5455 and 5555 Garden Grove Boulevard is around 150,000 square feet, which means a deal at its apparent value would come out to around $109 per square foot.
In an opposition to appoint a receiver, Younan Properties Chair and CEO Zaya Youna accused the plaintiff and its agents of “acting in bad faith,” in court documents dated late March.
“Never in my decades of working in commercial real estate have I heard of a special servicer contacting a borrower’s leasing agents and disclosing that a property was in special servicing as the lender’s special servicer did here,” he wrote. “As a result, the property has seen a marked decrease in leasing activity and faces the potential loss of current tenants.”
The property’s last known occupancy was 64 percent in June 2024, according to Morningstar Credit.
Youna said appointing a receiver would only harm the office campus and would “effectively kill any leasing activity and drive away existing tenants.” He added, if a receiver is appointed, it is likely that the entity that owns the property would be forced to file for bankruptcy.
A hearing to appoint a receiver was scheduled on Monday, but a minute order has not been issued yet. The attorney for the plaintiff declined to comment, and attorneys for the defendant did not immediately respond.
Servicer commentary via Morningstar Credit noted “foreclosure is being pursued concurrently with the receivership.”
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