Vella Group Defaults on $79M Loan Tied to Four LA Properties
Lender Madison Realty Capital doing workout deal
By Greg Cornfield August 31, 2023 4:10 pm
reprints
Vella Group has defaulted on a $79.1 million loan from 2021 tied to a portfolio of four industrial and office properties in the South Bay of Los Angeles.
Zach Vella’s company owed at least $1.4 million at the end of April, The Real Deal reported, citing an L.A. County default notice. Madison Realty Capital provided the funding on the 206,000-square-foot portfolio and can now schedule a foreclosure, but is engaged with Vella Group on a workout deal.
The lender had started a foreclosure but then retracted it.
The loan covers the properties at 12536 Chadron Avenue, 13100 Yukon Avenue and 13040 Cerise Avenue, as well as a development site available for lease at 13007 Yukon Avenue. The loan originally backed a fifth property in Carson, Calif., but Vella Group sold that property to a carpenters union for $46 million.
The default comes as office properties underperform and commercial real estate investment sinks in the post-COVID market. L.A. is experiencing the steepest decline in office prices in the nation, and office availability in Greater L.A. hit 26.6 percent at the halfway point in 2023 with more than 10.8 million square feet on the sublease market, according to Savills’ quarterly report.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
