L.A.’s Graffiti Towers Finds Path Forward After Years of Distress

A blighted, $1 billion luxury apartment development in Downtown Los Angeles may have finally found a way forward after years of distress, floor-by-floor vandalism and Chapter 11 bankruptcy.

Oceanwide Plaza, colloquially dubbed “Graffiti Towers” due to spray-painted tags on every one of its 40 and 49 stories, has found a bankruptcy-exit deal with its lenders, according to Bloomberg, which first reported the news. If the deal closes, it would pave the way for an unnamed potential investor to purchase the property for an undisclosed sum. 

The project’s main lender, LA Development Investment, would be entitled to a $230 million claim under the deal terms, per Bloomberg. The project’s other creditors are likewise entitled to potentially hundreds of millions of dollars, and the project still owes years of back taxes. 

“A prompt sale and eventual completion of the project is a major priority for the city and the public at large, particularly with the upcoming 2028 Olympic Games in L.A.,” attorneys for owner China Oceanwide Holdings Group said in a court filing on Jan. 28. “The city fully supports the approval of the settlement agreement.”

The 2 million-square-foot project by the Beijing-based development firm began construction in 2015, yet stalled about five years later after China curbed foreign investments. The project, at 1101 South Flower Street, has sat vacant and unfinished ever since. By early 2024, the two towers were making headlines again due to the highly visible graffiti and reports that local daredevils had scaled the towers to parachute down from their top floors. Oceanwide Holdings filed for bankruptcy on the project at roughly the same time. 

The L.A. City Council at the time mandated that Oceanwide Holdings clean the vandalized towers, or else face fines and potential demolition if the city was forced to take over the job. Yet the towers are still largely tagged nearly two years after the city’s deadline. 

Attempts to sell the towers in the intervening years have not gone according to plan, either. A foreclosure auction was set for the towers in September 2024, and brokers had attempted to close a $500 million “stalking horse” bid that summer, but the deal ultimately fell through and the auction date came and went without a buyer. Oceanwide Holdings claimed in 2022 financial filings that it would need approximately $1.2 billion to finish the towers, though it’s unclear how much the vandalism and exposure to weather over the past four years could have exacerbated that figure. 

“The settlement agreement … resolves a host of complex, multi-party disputes that have dominated this Chapter 11 case and a related state court action, threatening to exhaust [ownership’s] resources with no clear end in sight. … In the business judgment of the debtor’s chief restructuring officer, the settlement agreement is a practical and necessary solution that is fair, equitable and in the best interests of [ownership] and its creditors,” the Jan. 28 court filing said. 

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