Downtown L.A. Office Tower Placed in Receivership After Months of Distress

Downtown Los Angeles is finally beginning to recover from its post-pandemic slump, but several prominent office towers still have major uphill battles ahead.

The 42-story 1 Cal Plaza, for example, was recently placed in court-ordered receivership at the request of its lender, following nearly a year of financial distress. A Superior Court of Los Angeles County judge appointed Trigild to take control of the property, following default and subsequent foreclosure on its debt earlier this year. The Real Deal first reported news of the receivership. 

The 1 million-square-foot building and its sister tower, City National 2CAL, make up the prominent California Plaza on the corner of South Grand Avenue and Fourth Street, though the buildings have different ownership. 

Previous 1 Cal Plaza owners Rising Realty Partners and DigitalBridge acquired the tower for $459 million in 2017, supplemented that year by a $300 million loan via Credit Suisse subsidiary Column Financial. The debt was securitized as a commercial mortgage-backed securities deal. 

Yet financial issues mounted amid the pandemic. The debt on the property was placed in special servicing in 2021 due to a “cash management issue that was ultimately settled,” according to a Morningstar Credit report at the time, yet major cash flow and occupancy problems persisted, with the latter falling to more than 60 percent by the end of 2024. 

The property found itself in special servicing once again last September, and earlier this summer, the property was in foreclosure after its value tumbled to just $121 million, nearly 75 percent less than its 2017 value, due to “high vacancy and tenant departures,” according to a Trepp report at the time. 

Representatives for Rising Realty and DigitalBridge (formerly Colony Capital, and before that Colony NorthStar) did not immediately respond to requests for comment. 

One Cal Plaza isn’t the only Downtown L.A. office tower struggling to find a path forward. L.A.-based private equity firm Carolwood’s $130 million deal for the similarly sized, 41-story EY Plaza recently fell through. Former owner Brookfield had defaulted on $305 million in debt tied to the tower in 2023 while the assessed value of the property fell below the value of the loan and well below its peak.

Yet not all Downtown L.A. office towers are sob stories. Late last year, CIM Group, the owner behind Cal Plaza’s twin, City National 2CAL, inked a 200,000-square-foot, new headquarters lease with the Southern California Gas Company. The company will leave behind its namesake building, the Gas Company Tower, by next spring. 

Nick Trombola can be reached at ntrombola@commercialobserver.com.