Graffitied skyscraper in downtown Los Angeles poised for sale
Oceanwide Plaza, the bankrupt, unfinished development in downtown Los Angeles that became a canvas for trespassing graffiti artists, is officially on the market.
The Chinese owners of the stalled residential, hotel and retail complex towering over Crypto.com Arena have hired real estate brokers to sell the property to buyers who could restart the project after work stopped in 2019. Taggers recently covered its outer walls with graffiti visible from far away.
Likely bidders for the property include large institutional investors such as Blackstone Inc. and BlackRock, and cash-rich overseas sovereign wealth funds from the Middle East, Asia and Europe, property broker Mark Tarczynski said.
“I think there’s a broad range of buyers,” he said, “but the pool of buyers is small because of the size of the project.”
Tarczynski is part of a team from real estate brokerage Colliers and Hilco Real Estate that will market the property, which fills a large city block on Figueroa Street across from the arena and LA Live.
An April appraisal by Colliers submitted in a bankruptcy case involving the project estimated the as-is market value at nearly $434 million, Bloomberg said. Colliers also projected a cost of $865 million to complete the buildings, which are 60% finished.
Real estate developments stall from time to time as developers run out of money; but rarely do they fail in such a high-profile manner as Oceanwide Plaza, which was supposed to be a glamorous addition to the skyline and center of activity in the bustling sports and entertainment district of downtown’s South Park neighborhood.
Beijing-based Oceanwide Holdings bought a sprawling parking lot across from the arena in 2014 and soon set to work on a three-tower complex intended to house luxury condominiums and apartments, and a five-star hotel supported by upmarket stores and restaurants. It was also to include a massive electronic sign intended to help bring a Times Square flavor to Figueroa Street.
The international company ran into financial problems that coincided with a Chinese government decision to restrict the flow of outbound investment. Work stopped on Oceanwide Plaza in early 2019 as contractors building it stopped getting paid.
In February, general contractor Lendlease filed a petition for the involuntary Chapter 11 bankruptcy of Oceanwide Holdings to force a sale of the property and pay creditors who were demanding almost $400 million. Major creditors include Lendlease and EB-5 visa investors, who helped fund construction. Oceanwide also owes back taxes to Los Angeles County and money to repay the city for security put in place in response to the graffiti and other incidents including BASE-jumping paragliders leaping form the towers.
The city allotted nearly $4 million to remove graffiti and secure the property in February. The property is now surrounded by a tall metal fence.
After several arrests related to a vandalized L.A. skyscraper project, the City Council voted to spend $3.8 million to clean up and secure the site.
While some real estate observers have speculated that it might make sense to raze the towers to make way for a different development, Tarczynski predicts that the next owner will finish the existing project.
“It’s about two-thirds of the way done, with about $1.2 billion already invested in it,” he said. “Why would you tear down a perfectly good project? It’s unimaginable.”
Oceanwide’s location in the center of downtown’s sports and entertainment district should help entice investors to finish the complex, Tarczynski said.
“Every bit of the potential synergy between Crypto.com Arena, LA Live and Oceanwide Plaza still exists,” he said, “and there is a huge demand for housing and also hotel demand. This remains an attractive project.”
The brokerage team expects to distribute financial information and other facts about the project to qualified buyers early next month and call for offers by the end of July, Tarczynski said. “We hope to be in escrow by October.”
