1 Cal Plaza In Downtown LA Goes To Special Servicing
A $300M CMBS loan backed by 1 Cal Plaza has moved to special servicing.
The loan is set to mature in November, according to Morningstar, which reported the transition.
Refinancing is still a challenge, especially for many large office properties, and it is not uncommon for office loans to move to special servicing to allow workout discussions to begin. The property totals just over 1M SF.
The property at 300 S. Grand Ave. had been in special servicing in 2021 "for a cash management issue that was ultimately settled," according to Morningstar. But the property has struggled since then, and Morningstar found that the 2023 net cash flow for the property was 37% below the underwritten amount.
Occupancy is also facing issues. Law firm Skadden is set to vacate its roughly 100K SF space at the property this year after securing a space about half that size in Century City. Once Skadden is out, occupancy will drop to 63%, Morningstar reported.
1Cal Plaza is owned by Rising Realty Partners. Rising did not respond to a request for comment.
A 2023 report estimated that 20% of all office loans in Los Angeles were slated to mature between 2023 and 2025. A previous Morningstar report estimated that $1.8B in CMBS debt was slated to come due this year alone in Los Angeles.
“The overwhelming share of those [properties] are going to be facing a significant amount of lease rollover and/or current vacancy,” Moody’s Analytics Director of CRE Economics Matt Reidy told Bisnow last year.
