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Another foreclosure is looming in Downtown LA, this time for a 48-story tower at 444 South Flower St.
Oaktree Capital Management began foreclosure proceedings on the property, owned by Coretrust Capital Partners, Bloomberg reported. The foreclosure uses the Uniform Commercial Code, a process that doesn't require the issue to go through the courts and can usually be completed in a few months, according to The Real Deal.
Oaktree, which is a mezzanine lender on the property, holds a $106.9M loan. The auction date is Nov. 18, according to TRD. A representative for Coretrust didn't immediately respond to requests for comment, and Oaktree declined to comment.
“We are both surprised and disappointed that Oaktree moved forward with what we believe are unnecessary and aggressive actions,” Coretrust Capital Partners Managing Principal John Sischo told Bloomberg. “We intend to act in good faith and expect Oaktree to do likewise.”
It is unclear when distressed debt specialist Oaktree, described by the Financial Times as one of the “best-known scavengers on Wall Street,” made the loan to Coretrust. It purchased the building from Hines in 2016, paying $336M.
The potential foreclosure comes as the future of Downtown’s office market, especially its glassy office towers, is unclear. As of Sept. 17, the number of workers back in LA offices hadn't reached 50% of pre-pandemic figures, Kastle Systems numbers show. That stat varies from submarket to submarket, with Downtown often mentioned as a neighborhood whose lagging recovery is especially noticeable.
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