Oceanwide Plaza Lawsuit Settled, But A Sale Remains Elusive

Oceanwide Plaza, the billion-dollar, graffiti-covered, partially built condo project that looms over Downtown LA is still in search of a buyer, but once it sells, its creditors at least know who will be first in line for payment.

A lawsuit to determine lien priority on the maligned set of towers was resolved Feb. 25, with a judge ruling that the project’s lender, LA Downtown Investment, is first in line for payment rather than contractors that are owed millions.

Holding first priority means the lender is likely to be paid in full, while other creditors may be paid only in part, the Los Angeles County Superior Court ruling notes. 

LADI held a more than $200M lien against title to Oceanwide Plaza, according to a release from the firm. The lender’s lien was granted priority over more than $215M in project contractor claims. 

“The bankruptcy court is going to try and move pretty quickly to transition this property to a new owner,” said Greenberg Traurig shareholder Eric Rowen, who was on the firm’s team representing LADI in the lien priority case. 

However, the speed of the sale is largely dependent on the search for a buyer willing to pay the price and take over a troubled project.

The estimated $1B required to complete it plus a ballpark $500M to acquire the site has slowed the sale, said Mark Tarczynski of Colliers, who is part of the team facilitating the sale. 

“I’ve got to tell you, putting together a billion-five in today’s environment is not exactly easy,” Tarczynski said.  

“I’ve been estimating four weeks [to close a sale] for the last three months,” Tarczynski said. “At this point, it’s just kind of useless to estimate. It’ll happen this year, and I’m hoping it will happen before the close of Q2.” 

There are a handful of potential buyers for the property, which was estimated to cost at least $900M to finish on top of the $1.2B Oceanwide Plaza’s developer said it invested in the project as of 2022. 

The three-towered property is centrally located in Downtown across the street from the Crypto.com arena and is very visible, especially since it became emblazoned with graffiti. The towers were originally planned to hold an 184-room Park Hyatt Hotel, 504 condos and a two-level open-air galleria with approximately 166.5K SF retail.

The parent company of Oceanwide Plaza’s developer, China Oceanwide Holdings, was facing liquidation on multiple international fronts last year. 

Oceanwide Plaza is amid an involuntary Chapter 11 bankruptcy proceeding and its sale is part of that process.

LADI had gone up against contractors Lendlease and Webcor in court in a case that dates back to 2019. That same year, work at the trio of towers was ground to a halt as the early signs of financing trouble at the project began to appear. 

The bankrupt and incomplete project was estimated to have a roughly $434M fair market value, The Real Deal reported last summer. 

It’s unclear whether Lendlease will appeal the lien priority decision. 

“We are exploring our options for the recovery of monies owed to local subcontractors and to Lendlease in regards to the Oceanwide Plaza development,” Lendlease CEO of the Americas Claire Johnston said in an emailed statement. “Our focus remains on reaching the best financial outcome for our subcontractors and for our business, and bringing the project to a positive outcome.”