In a recent development, real estate firms SteelWave and Barings, represented by their affiliate, have handed over control of a 164,400 square foot office building in El Segundo to lender New York Life. The decision follows financial difficulties, with $53.1 million in troubled debt linked to the property, prompting the signing of a deed in lieu of foreclosure for the building at 2160 East Grand Ave., Costar reported.
The affiliate originally acquired the three-story building called Grand + Nash in 2019 for $63.5 million, with a subsequent $69.6 million loan from New York Life dedicated to a comprehensive renovation completed in 2022. The refurbishment included the establishment of a “tenant amenity experience center,” boasting a modern lounge, a state-of-the-art gym and versatile indoor-outdoor meeting spaces.
Despite the substantial investment in upgrading the property, public records indicate that the landlords faced a substantial $53.1 million in unpaid debt related to the building. The specifics of the loan maturity date or the reasons behind the property surrender remain undisclosed. However, industry insiders suggest a potential decrease in property valuation as a contributing factor.
As a result of this financial repositioning, the entire Grand + Nash building is now available for lease. The property’s amenities, including a cafe, lounge, gym, rooftop decks and flexible meeting areas, are highlighted in the listing.
In general, the office market across Greater Los Angeles has struggled over the last several quarters. A fourth quarter Los Angeles office market report from Newmark shows that in general companies in the region continue to vacate distressed office properties, particularly in the downtown area. The overall vacancy and availability rates have continued to rise, reaching new highs at 22.8 percent and 27.8 percent, respectively. Meanwhile, sublet availability experienced a slight decrease by 10 basis points for the second consecutive quarter, stabilizing at five percent. Notably, 46 percent of the Greater Los Angeles office inventory comprises buildings with sub-80 percent occupancy rates. Such buildings, with lower occupancy levels, often face challenges in generating positive net operating income, posing difficulties in servicing any existing debt on the property.
