Finance  ·  CMBS

L.A.’s Gas Company Tower Now Worth $215M

That’s a 21% tumble from its last appraised value a year ago

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The prospects have gone from bad to worse for the assailed Gas Company Tower in Downtown Los Angeles.

The value of the 1.4 million-square-foot office building — which backs a $350 million CMBS loan and more than $100 million in mezzanine financing — has been cut down again, according to Trepp. This time it has been reduced to $214.5 million, which is about 21 percent lower than its last appraised value last summer.

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After being valued at $632 million just three years ago, the decline of the market worth of the fifth-tallest structure in L.A. has been one of the most prominent examples of the larger downturn in office real estate in Southern California since the COVID-19 pandemic.

The new valuation for the 52-story building is equal to about $153 per square foot, or about one-third of an estimated $450 per square foot in 2021. It’s set for a foreclosure sale after a Brookfield (BN)-run fund ditched the asset after the financing matured.

The building is currently 57 percent leased.

The $465 million of combined debt is tied to the building at 555 West Fifth Street, which was completed 33 years ago and renovated in 2017, as well as a garage at 350 South Figueroa Street, per Trepp. Brookfield did not use its option to extend the maturity date in 2023 on the Gas Company Tower and another nearby tower, and handed the keys to the building to a receivership.

Earlier in May, JLL (JLL) announced it was selected to market the Gas Company Tower for sale. CoStar also reported that foreclosure filings indicate the city could be a potential buyer. 

Separately, the City of Los Angeles is set to move more than 1,200 employees from five municipal departments into the Gas Company tower after signing a 15-year lease for 310,000 square feet. That deal is a godsend after WeWork recently closed 92,000 square feet at the tower, and law firm Sidley Austin is set to vacate 137,000 square feet in October 2026.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com