Another struggling office tower in Downtown Los Angeles has fallen in line both with similar assets in the commercial real estate market and with the wider decline in demand for traditional office space.
The value of the 41-story EY Plaza office building has dropped from $446 million three years ago to $210.7 million this month, according to a Trepp report. That puts the building well below the value of the $275 million commercial mortgage-backed securities (CMBS) loan it backs from Morgan Stanley (MS) and Wells Fargo (WFC).
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News of the dip comes after the owner, a Brookfield (BN)-managed fund, missed payments and went into default on the loan on the 920,308-square-foot office at 725 South Figueroa Street, which was then sent to special servicing. Trepp added that there is also a $30 million mezzanine loan on the property — held outside of the CMBS trust — meaning the negative equity on the asset is now about $90 million.
“The proverbial other shoe dropped with the release of December servicer data,” per Trepp.
Gregg Williams of Trident Pacific Real Estate, the appointed receiver, retained Colliers as exclusive leasing and property manager. Neither Colliers nor Williams were immediately available for comment.
The Brookfield fund — Brookfield DTLA Fund Office Trust Investor — has defaulted on financing tied to two other nearby skyscrapers, the Gas Company Tower and the 777 Tower, which carry loans totaling $784 million. The Gas Company Tower has also since been put into a receivership, and saw its value deflate by 57 percent.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
