DTLA's Broadway Trade Center In Foreclosure After Default On $221M Loan
Broadway Trade Center, a 1.1M SF mixed-use building in downtown Los Angeles, is in foreclosure after lengthy nonpayment of a $221M debt on the property, according to a complaint filed in May in Los Angeles Superior Court.
Broadbridge LA, a joint venture of Waterbridge Capital and Continental Equities Group, planned to redevelop the property but stopped paying on a $213M loan it received in 2018 from a subsidiary of Starwood Property Trust.
On June 8 of this year, the court granted a request from another Starwood-controlled entity, Museum Building Holdings, to transfer the property to a receiver – effectively turning over the Broadway Trade Center to an outside party tasked with protecting the investment of the lender by taking control of the development.
Museum Building Holdings “is informed and believes and on that basis alleges that by virtue of borrower’s failure to pay the amounts due under the notes, borrower is financially incapable of curing said defaults,” the complaint states.
The Broadway Trade Center takes up nearly a full city block. It was built in the early 20th century as a department store. The plan was to restore the exterior and overhaul the interior, adding more than 350K SF of office, more than 400K SF of retail and a 186-room hotel, Commercial Observer has reported.
By the end of 2019, the amount owed totaled $218M, the complaint claims. Museum Building Holdings said that Broadbridge agreed to repay full principal of the loan on or by the maturity date of June 9, 2020.
But the repayment never came. A number of extensions and payment deferrals were established, but the complaint alleges that those dates passed without the debt being paid off.
Broadbridge’s debt was most recently due in full on Dec. 31, 2021. It was not paid. Property taxes due in November 2021 were also unpaid, the complaint claims, although the county assessor’s website now shows them as current.
In March 2022, MBH sent a notice of termination to Broadbridge.
In April, MBH recorded both a notice of default and a notice of its intent to sell the property under the deed of trust at the county recorder’s office, the complaint says.
As of May 24, MBH says it is owed a total of $175.98M outstanding on the principal of the loan and an additional $45.6M for another loan it made to Broadbridge for the project, or about $221.6M in all.
Museum Building Holdings’ complaint says that the terms of the agreement for the loan and a subsequent “standstill agreement,” entered into after the original maturity date of the loan passed, allow it to seek the appointment of a receiver to take possession of the property under these circumstances.
Broadbridge LA had a chance at the end of June to appear at a court hearing and make the case against confirming the receiver for this property. It did not file an opposition, a June 30 court filing noted.
Attorneys representing MBH and Broadbridge did not respond to requests for comment. Waterbridge Capital did not respond to a request for comment and representatives for Continental Equities could not be reached.
The Broadway Trade Center might not be an easy property to offload. In November 2020, it was up for sale, with owners reportedly hoping to sell for as much as $425M. CBRE was marketing the listing, but the campaign was apparently unsuccessful.
It does not appear that work is happening at the site. In late June, the Los Angeles Department of Building and Safety noted a code enforcement issue at the property citing an "abandoned or vacant building left open to the public," but that issue seems to have been handled.
The Los Angeles Building and Safety Department told Bisnow in an email Tuesday that the building was inspected on July 9 and found to be "secured from unauthorized entry."
Downtown tour company Esotouric also documented the declining scaffolding wrapped around the building, tweeting photos showing bent and splintered structures over pedestrian walkways.
Though this project is stumbling, it seems Waterbridge Capital has not given up on downtown. The company is in the process of buying Union Bank Plaza, a 40-story tower in Downtown’s Financial District. It has proposed a $155M purchase price, far below what the tower was expected to sell for when it hit the market a year ago, but an offer that the tower’s owners are considering because of the unfortunate combination of rising interest rates and a sluggish demand for downtown office space.