L.A.’s Gas Company Tower Heads to Foreclosure Sale
By Greg Cornfield March 28, 2024 10:10 am
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The Gas Company Tower, a 52-story building in Downtown Los Angeles, is on track for a foreclosure sale about a year after a Brookfield (BN)-run fund ditched the asset in the wake of plummeting office values.
Located at 555 West Fifth Street, the tower is the city’s fifth-tallest building, and has epitomized the struggles facing traditional office real estate since the pandemic. Since the Brookfield fund defaulted on the building last year, the 1.4 million-square-foot building has been put into receivership, seen its value drop by 57 percent, and watched big tenants leave.
Bloomberg reported a foreclosure sale could be held by mid-June. The building is 73 percent leased and has $465 million of debt tied to it, the largest portion coming in the form of a $167 million commercial mortgage-backed securities loan from Pacific Investment Management.
The city’s office market has been marred by rising vacancy rates and declining leasing activity due to the rise of remote work, along with higher interest rates and a new transfer tax. Earlier this week, the same Brookfield fund unloaded 777 Tower — the seventh-tallest building in L.A. — for a loss at $145 million, which is about half the remaining debt that’s tied to it. The once-trophy portfolio also included EY Plaza, which saw its value plummet below its loan balance after it went into default.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
