Receivership spells new path forward for Los Angeles trophy E&Y Plaza 

The property is the latest Los Angeles office building to experience severe headwinds. 

Ernst & Young Plaza, a trophy office building in downtown Los Angeles owned by a Brookfield Properties-managed fund, was sent to receivership last week after the company missed consecutive payments on a $275 million commercial mortgage-backed security loan.  

But Gregg Williams of Trident Pacific Real Estate, the building’s court-appointed receiver, sees a clear path forward for the 41-story, 968,184-square-foot office tower. The receiver immediately hired Colliers to handle leasing, with the belief that the building’s location and provenance will help bring in new tenants. 

“EY Plaza is one of the best office buildings in all of Los Angeles, and its value is worth protecting,” said Sean Fulp, head of office capital markets of Colliers’ US Southwest. “We will not sit back and wait for the market to determine its fate.”  

Ian Gilbert, executive vice-president specializing in agency leasing and tenant representation across West and Downtown Los Angeles at Colliers, noted the property has some natural advantages that will make it easier to lease. “Few office assets of this caliber exist in Downtown Los Angeles, and its rich history, open-air design, and walkability.”  

The road to receivership 

The receivership was arranged after Morgan Stanley and Wells Fargo, which originated the troubled CMBS loan on the property, filed a lawsuit last month to ask for the appointment of a third-party receiver after Brookfield fell behind on the loan. Williams will work to help recover funds for creditors and has the right to market and sell the property, with the proceeds of the sale paid back to the creditors.   

The transfer came after Brookfield issued a warning to investors earlier this year acknowledging that the cash generated from EY Plaza would not be sufficient to cover impending debt obligations, leasing costs and capital expenditures. Despite its history and quality, the property has struggled amid a slow return to work trend in Los Angeles. The property’s debt services were also pushed up in an elevated interest rates environment.  

EY Plaza is the second Brookfield office property that has been put into special receivership this year. Gas Company Tower, another downtown LA trophy office building, was sent to a receiver in late April after the firm defaulted on $350 million in the building’s CMBS loans.  

At the same time, Oaktree Capital Management, an alternative investment manager owned by Brookfield Asset Management, has secured a three-year extension from AIG on the $258.8 million loan tied to 444 South Flower Street in downtown Los Angeles. Oaktree, which was the mezzanine lender on the sponsor, gained control of the asset after foreclosing on the sponsor, Coretrust. Oaktree in January hired JLL to handle leasing at the property.