Oaktree Capital Management this week obtained a loan extension from New York-based insurer American International Group for 444 South Flower, a prominent office building in the Downtown Los Angeles submarket.
The extension came after Oaktree took control of the building from Coretrust Capital Partners via a January 30 auction under the uniform credit code. The Los Angeles-based firm subsequently hired JLL as the building’s leasing agent and executed 90,000 square feet of new leases at the 48-story, 914,000-square-foot tower.
Justin Guichard, a managing director and co-portfolio manager at Oaktree, says the loan extension means the JLL team now has resources to more aggressively secure new tenants and continue the leasing momentum seen over the past few months. “We know that a return to office will drive a flight to quality,” he adds.
The loan will help the manager with future funding requirements as well as leasing efforts and the construction of suites and other amenities, according to a press release. Additional details on the extension could not be determined.
Oaktree had provided a $64.7 million mezzanine loan on the building in 2018 as part of a refinancing package, with AIG originating a $209.6 million senior loan. Coretrust Capital Partners acquired the building in 2016 via a transaction financed by a $230 million Bank of China loan.
Bright spot
The loan extension and leasing is a bright spot in Downtown Los Angeles, where a number of well-known office buildings have been dealing with foreclosures, maturity defaults and short sales or have been sold at steep discounts as vacancy rates have risen.
Union Bank Plaza, a 40-story tower at 445 South Figueroa Street, was sold in April for less than half of what its previous owner, Los Angeles-based investment manager KBS, paid in 2010. And Toronto-based investor and Oaktree owner Brookfield Properties in February defaulted on $784 million of loans on two well-known Los Angeles skyscrapers, Gas Company Tower and 777 Tower. Shorenstein, meanwhile, is looking to sell Aon Center, a 1.1 million square foot tower at 707 Wilshire Boulevard, for a significant discount to what it paid, according to published reports.
While the Downtown Los Angeles market has been affected by a slow return to work, Hayley Blockley, a managing director at JLL, noted the tower has some unique features which are helping to bring in tenants. The LEED Gold property is one of a handful of office buildings in the submarket that has received a carbon neutral certification and is energy star certified.
Moreover, the property includes an open-air atrium and landscaped terraces as well as amenities like high-end gym and restaurant facilities. The bulk of leasing interest has been coming from companies looking specifically for an amenitized property to help draw back in staff, Blockley added.
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