TRD Insights: Tenants pay within the large Metropolis Nationwide Plaza in LA – The Actual Deal
The City National Plaza office complex in downtown Los Angeles received refinancing of $ 550 million from Morgan Stanley and Goldman Sachs in late March as the CMBS market settled in response to the coronavirus pandemic.
Two months later, when the market started to recover, part of this $ 330 million loan was included in a single borrower transaction called MSC 2020-CNP, while smaller parts were included in several other conduit deals.
Financial information related to the securitization reveals details of the finances of the massive two-tower building at a time of uncertainty for the office market in Los Angeles and across the country.
The complex has around 1.2 million square meters of office space and 123,000 square meters of retail space and was 81.4 percent let in March.
The largest tenant of the building is the namesake of the complex, the City National Bank, which occupies a dozen floors in the south tower and accounts for 14 percent of the rental space and 17 percent of the basic rent. The top 10 tenants include four Am Law 200 law firms, with most tenants paying rent in the high $ 20 per square foot.
The most expensive rent per square foot among the large office tenants is paid by the Boston Consulting Group, which pays $ 33.87 per square foot for the top two floors of the North Tower. Meanwhile, Jones Day law firm pays just $ 23.79 per foot on six floors near the top of the South Tower.
The property is owned by a joint venture between CommonWealth Partners and California Public Employees' Retirement System. CalPERS, the country's largest public pension fund, holds a 99.7 percent financial stake, while a CommonWealth subsidiary manages the property. The company acquired the property in 2013 for $ 858 million.
Due to the corona virus, all retail tenants in the complex were closed in early May and most office tenants worked remotely. Law firm Paul Hastings, the second largest tenant, requested rent relief and renegotiation of certain rental terms, as did nine other non-retail tenants who account for 10.6 percent of the rental space and 13.6 percent of the basic rent.
By the end of this month, the landlord had collected 91.6 percent of the basic rent due for the month of April, and the loan payments are still current.
Other notable tenants of the property are the brokers JLL and Marcus Millichap, the construction companies Lendlease and Turner Construction as well as the flexible office space provider Regus.
Leasing activity in Los Angeles has slowed dramatically as a result of the coronavirus pandemic, and market uncertainty has also put real estate valuations under pressure. The nearby US Bank Tower is now said to be acquired by New York's Silverstein Properties for $ 430 million. This corresponds to a price reduction of 34 percent compared to the book value before the corona virus.
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Contact Kevin Sun at (email protected)