Background on the Debt Situation

The financial troubles surrounding the Wedbush Center, a prominent 21-story office tower in Downtown Los Angeles (DTLA), have escalated, leading to the transfer of its $128.4 million mortgage loan to special servicing. This situation marks another example of the ongoing distress within DTLA’s office real estate sector.

The loan, tied to the 476,000-square-foot building located at 1000 Wilshire Boulevard, was issued by Goldman Sachs in 2018, the same year Cerberus Capital Management acquired the property for $196 million from Lincoln Property Company.

Occupancy Challenges Impacting Financial Performance

Recent reports indicate that Cerberus is grappling with significant occupancy issues at the Wedbush Center, which is currently experiencing a drop in occupancy rates. The building recently reported 75 percent occupancy, a decrease from 87 percent at the time of the loan agreement. Further compounding these challenges, the net cash flow for the property in 2023 has fallen 45 percent below initial projections, as outlined by a Morningstar Credit report.

Impact of Tenant Relocation

The situation is expected to worsen as Wedbush Securities, the tower’s largest tenant, is planning to vacate its 100,000-square-foot space when its lease expires in December. The company intends to relocate to a smaller 20,000-square-foot office in Pasadena, which could further decrease occupancy rates at the center.

Looking Ahead

As the Dowtown Los Angeles office market grapples with rising vacancies and declining financial performance, the repercussions of such trends are likely to continue impacting properties like the Wedbush Center. A representative for Cerberus has not yet commented on the current situation.