Oaktree Capital’s Distressed Charlotte Office Tower to Auction

Oaktree Capital Group’s distressed office tower in uptown Charlotte is headed to auction next week.

The 32-story building at 400 South Tryon will be sold at a public auction on Jan. 10, the Charlotte Business Journal reported.

The sale follows a court-approved foreclosure after Oaktree defaulted on a $93.5 million loan in July 2023. The Los Angeles-based firm purchased the building in 2018 for $133.5 million, or about $227 per square foot, with financing from Citizens Bank, later restructured to include Synovus Bank. The lenders sued for foreclosure in November.

Trinity Capital Advisors retains a stake in the 587,000-square-foot property from its 2014 acquisition with New York’s DRA Advisors. Gary Chesson, a founding partner at Trinity and a guarantor on the loan, retired in December 2021.

The default left more than $90.7 million in principal and interest unpaid as of Nov. 4, prompting the foreclosure and subsequent auction. JLL’s Lewis Taulbee was appointed as limited receiver to oversee property management and assist in foreclosure proceedings.

The building is just 23 percent occupied and tenants include architecture and engineering firm LaBella Associates and digital marketing agency Olly Olly.

High vacancy rates driven by the remote-work movement have led to a reduction in office demand and increased sublease availability nationwide. The situation is exacerbated by rising interest rates and tighter lending standards, making it difficult for property owners to manage mortgage payments and operational costs,

Charlotte’s office vacancy rate hit 24.7 percent in the second quarter, according to Cushman & Wakefield. The city’s record-high vacancy has largely been driven by weak demand and the delivery of large speculative office developments.

The development pipeline is slowing, however, with 39 percent fewer commercial projects entering the development pipeline this year compared to last year.

The auction for 400 South Tryon Street will take place at 10 a.m. on the first floor of the Mecklenburg County Courthouse, located at 832 East Fourth Street.

— Andrew Terrell