The Fallas family’s Metropolitan building in Downtown Los Angeles’ Historic Core moved a step closer to receivership and foreclosure.
A special servicer for the lender and commercial mortgage-backed securities holders requested a receiver this month, initiating a judicial foreclosure. Special servicer LNR alleges the borrower, the Fallas family, defaulted on their loan on the Beaux-Arts style building and owes about $32 million. Natixis originated the debt.
The ownership “is financially incapable of curing defaults” the complaint reads.
LNR and the Fallas family are still in talks, which could result in a short sale, a person familiar with the matter said. Still, LNR tends to initiate dual-track receiverships, where it pursues that and foreclosure while continuing to negotiate with the borrower.
The loan on the seven-story, mixed-use property at 449 South Broadway is in special servicing, as The Real Deal previously reported. Servicer commentary in February noted the lender was lawyering up while in talks with the borrower.
The Fallas family has been shopping the property, according to a Zacuto Group and Northmarq offering memorandum, which does not include a price. The 1913 building, designed by John Parkinson, includes 88 apartments, a rooftop pool and vacant ground-floor retail, a former Fallas Paredes store. The apartments are 91 percent occupied, per the marketing materials. The person familiar said there are offers on the table.
The debt on the 160,000-square-foot building comes out to about $200 per square foot, likely more than it would trade for.
Robert Warren of Investors’ Property Services was requested to be the receiver. The complaint also requested the Fallas family cede all rights to the real estate and that the receiver sell the building.
LNR declined to comment. Fallas and Natixis did not immediately respond to a request for comment.
Michael Fallas, who was CEO of National Stores — a discount retailer founded by his father, and the bankrupt parent company of Fallas Paredes — signed the loan documents. A notice of default was sent to him in February, prior to the complaint, as well as a notice of acceleration in May, documents show.
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