KPC and partner Lendlease have responded to the City of Los Angeles’ concerns over their proposed $470 million purchase of Oceanwide Plaza — claiming they need the certainty of a bankruptcy court’s approval to satisfy concerns on financing and their ability to complete the long-stalled mega-project.
But before going on to list reasons they can’t provide more information — a sticking point for the city — the entity said in court documents filed on July 6 that there is “only one buyer prepared to close” on a deal for the three-tower, almost 3-million square-foot, unfinished development on Figueroa Street near the Los Angeles Convention Center.
There’s another offer behind the scenes, The Real Deal has previously reported. Even so, the city’s objection to the KPC-Lendlease proposed purchase cited specific concerns. The city said it could not go along with the plan because it had not received sufficient information and supporting materials on financing, construction phases and more, per court documents.
The city is a creditor and has to approve the plan. Its doubts over KPC’s ability to close and complete the graffiti-covered towers was enough to delay a confirmation hearing by the court for a second time.
KPC, which came into the mix via its purchase of another entity’s claim, and one-time general contractor Lendlease, said the “city is wrong to assert that, absent its approval of entitlements, the plan cannot be confirmed” because the contingencies in the purchase and sale agreement can be waived by the KPC-Lendlease entity. Whether that is in the PSA or not, the City Council outside of the court has a say on what’s developed in Los Angeles.
On financing, KPC claims in order to secure a construction loan, the lender would need a total cost estimate from a general contractor. That’s a pricey process, and KPC said it’s unwilling to undertake it if the court hasn’t approved the deal. KPC went on to say that construction plans and timelines can’t be given until court approval, either.
“The task of putting together a reliable presentation to address the information requests for a 2.7-million-square-foot mixed-use development is daunting to say the least,” the partnership said, adding later that it was operating under constraints without clarifying.
It went on the attack and argued the city hasn’t provided a timeline on when it can approve entitlements. It also said it gave the city more information in response to its objection.
The latest information, according to KPC, indicates that the city might need more time on entitlements. KPC wants more time to close if that is the case, and has asked the court for that in its response. There was previously a six-month closing period.
If the court approves the request, KPC said it would still spend millions of dollars to remove the graffiti and remediate the development — so it will already be done even if the deal does not go through.
The buying entity said that if the plan isn’t confirmed, creditors won’t be paid, including the Los Angeles County, and the graffiti will probably still be a stain on the unfinished complex for the 2028 Olympics.
KPC pushed back that it needed to prove it could complete the development, contending that “the notion that the plan is not feasible is specious. The city’s objection should be overruled, and the plan should be confirmed.”
Representatives for the city and the KPC-Lendlease JV did not immediately respond to a request for comment. Oceanwide chief restructuring officer Bradley Sharp said the parties are in “productive” talks.
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