$300M Loan Tied to Downtown L.A. Office Tower Heads to Special Servicing
By Nick Trombola September 12, 2024 4:10 pm
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The revolving door of office distress in Downtown Los Angeles just keeps on spinning.
A $300 million CMBS loan tied to the 1 Cal Plaza tower has entered special servicing, according to Bisnow, which cited a Morningstar report. It isn’t the first time the debt has found itself in servicing, either.
The debt on Rising Realty Partners and DigitalBridge’s 42-story tower at 300 South Grand Avenue was first placed in special servicing in 2021 for a “cash management issue that was ultimately settled,” per Morningstar, but cash flow and occupancy levels at the property have remained an issue in the years since. Net cash flow at the property was 37 percent below the underwritten sum last year, per Morningstar, while occupancy will fall to 63 percent later this year once law firm Skadden vacates for its downsized lease in Century City.
Rising Realty, led by L.A.-based developer Christopher Rising, and Digital Bridge (known as Colony Northstar at the time) bought the property in 2017 for $459 million from Beacon Capital Partners, using the $300 million loan provided by Credit Suisse (CS) subsidiary Column Financial.
The seven-year, fixed-rate loan replaced an existing $288 million bridge loan on the tower, and returned $7.3 million in equity to the debt’s sponsor, Commercial Observer reported at the time. The new debt was then securitized in a single-asset CMBS deal.
Representatives for Rising Realty did not immediately respond to a request for comment.
The roughly 1 million-square-foot tower, together with its sister at 350 South Grand Avenue, dubbed City National 2Cal, comprise the California Plaza complex, though the two buildings fall under different ownership and management.
City National 2Cal owner CIM Group recently signed gas utility giant the Southern California Gas Company for nearly 200,000 square feet, and top billing, at the tower. The company will leave its current headquarters, and home for over 30 years, at its namesake Gas Company Tower in early 2026.
Nick Trombola can be reached at ntrombola@commercialobserver.com.
