Laguna Point Properties Late On $329M Loan Payments
Just under a year after buying a more than 1,000-unit apartment portfolio in Downtown Los Angeles, Laguna Point Properties is delinquent on the $329M loan it used to buy the apartments.
The firm is more than 30 days delinquent on its loan, according to The Real Deal, citing data from DBRS Morningstar.
The lender was MF1 Capital, a joint venture between Berkshire Residential Investments and New York-based Limekiln Real Estate. A representative for Berkshire didn't immediately respond to requests for comment. Representatives for Limekiln couldn't be reached.
A representative for Orange County-based Laguna Point Properties told Bisnow the loan isn't in default but didn't comment further.
This isn't the first sign of trouble with Laguna Point's purchase of 1,037 units across five properties. The portfolio includes SB Manhattan at 215 West Sixth St., SB Lofts at 548 South Spring St., SB Tower at 600 South Spring St., SB Spring at 650 South Spring St. and SB Main at 111 West Seventh St. Laguna Point paid $402M in April 2022 for the handful of properties, a record for Downtown at the time.
The company knew that the properties needed upgrades, but in an August court filing, it alleged that the seller of the portfolio, a group of LLCs controlled by Barry Shy's SB Properties, didn't disclose the full scope of the issues at the adaptive reuse buildings, including pending tenant litigation, unpaid bills and other costly issues. The seller disputes the allegations.
It is unclear why the loan payments are delinquent, but in court filings, Laguna Point said it has incurred significant expenses at the buildings, including one property where Laguna Point had to pay $200K to fix a fire pump motor, TRD reported.
Occupancy across the portfolio had slumped to 87% in February, a significant drop from the 97% occupancy the properties had when the loan was secured, according to TRD.
