Downtown L.A.’s Oceanwide Plaza Project Stalls Again as Stalking Horse Bidder Falls Through
By Isabelle Durso July 24, 2024 1:05 pm
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The Oceanwide Plaza towers in Downtown Los Angeles have hit another obstacle after a stalking horse bidder for the project fell through this week.
Lawyers for Oceanwide said during a Tuesday court hearing that an undisclosed group was “identified” to potentially drop $500 million for the site but “did not meet deadlines” to submit a bid, The Real Deal reported.
A spokesperson for the law firm Bryan Cave Leighton Paisner, which represents the development, did not immediately respond to a request for comment.
Chinese developer Oceanwide initially planned for the two-tower, 2 million-square-foot development site, opposite L.A.’s Crypto.com Arena, to be a “significant mixed-use development in the history of Downtown Los Angeles,” the developer wrote in marketing materials. Oceanwide fell into financial strife and the project halted construction in 2019, and it now sits as a bankrupt “skyscraper playground” that had been repeatedly tagged by graffiti artists.
Colliers (CIGI) Executive Vice President Mark Tarczynski, one of the lead brokers in charge of the Oceanwide auction, previously told Commercial Observer that it had been in negotiations with a stalking horse bidder for the property and had been trying to finalize a contract by mid-August.
“It’s 1.7 million square feet of GLA [gross living area] — that’s a large project,” Tarczynski said. “The biggest challenge is, only a handful of people can pull it off. Right now, the challenge is, will the city cooperate and be a partner in getting this done before the Olympics?”
With L.A. hosting the 2028 Olympics, brokers are trying to complete deals on the project as soon as possible.
Oceanwide recently asked the court to introduce a breakup fee of 2.5 percent on the deal, meaning the company would have to pay a stalking horse bidder if it chooses to go with an alternative, according to court records.
“While the property is subject to extensive marketing, the allowance of the proposed breakup fee will likely encourage competitive bidding and result in further bidding,” Bradley Sharp, who was hired as the chief restructuring officer for Oceanwide, wrote in a court filing last week.
Deborah Saltzman, the federal bankruptcy judge overseeing the case, was reportedly skeptical of approving the breakup fee without a stalking horse bidder in place, TRD reported.
As attorneys work to nail down a deal, court records show that bids on Oceanwide are due on Aug. 15, with an auction set to take place Sept. 17.
The Oceanwide project, which court records show stands at a $434 million market value, has sat graffitied since 2019, earning it the nickname “Graffiti Towers,” and owes about $400 million to creditors. Contractors on the development forced Oceanwide into bankruptcy earlier this year.
Isabelle Durso can be reached at idurso@commercialobserver.com.
