Workers in hard hats arrived unannounced at the infamous “Graffiti Towers” in downtown’s entertainment district Wednesday to begin the painstaking process of stripping the spray paint off every window and balcony across the $1.2 billion megaproject.
Neighbors gazed up to see steel surfaces reemerge on the unfinished towers for the first time in years.
Kali Chaudhuri and Lendlease’s KPC kickstarted the $3 million graffiti abatement at 1101 South Flower St. ahead of schedule, and apparently without notifying city officials, according to a spokesperson for Mayor Karen Bass’ office.
But that’s all water under bridge if KPC closes the deal to purchase the bankrupt towers, known as Oceanwide Plaza, in the coming months.
The joint venture formed earlier this year between Chaudhuri, an orthopedic surgeon-turned-entrepreneur, and Australian construction firm Lendlease, the original general contractor hired to oversee the project nearly a decade ago.
KPC emerged as the frontrunner in the Chapter 11 auction process and signed a Purchase and Sale Agreement in February. It took another six months to hammer out a plan to present to a judge in a confirmation hearing July 20.
A U.S. bankruptcy judge confirmed a liquidation plan Thursday that gives KPC six months to make good on its $470 million bid, plus opportunities for extension.
The offer is comprised of a $400 million credit bid consisting of secured claims from EB-5 investors and $70 million in cash, though that amount has now increased to more than $500 million due to accumulating fees during the months-long negotiations with city officials, secured creditors, and other stakeholders.
Closing the deal?
If KPC stumbles in closing the deal at this point, at least two other bidders are sharpening their pencils behind the scenes, according to the recent court filings.
Councilmember Ysabel Jurado, whose district includes Oceanwide Plaza, said the court’s confirmation of the liquidation plan was “an opportunity to turn the page on a project that has remained unfinished for far too long.”
Beijing-based conglomerate Oceanwide Holdings launched the development in 2015 after purchasing the undeveloped site across the Crypto.com arena. It planned to build two 40-story residential towers containing 504 condos and third 49-story tower that would be home to 184-key hotel. The buildings also contained a total 153,000 square feet of retail space.
The proposal fit into the vision Los Angeles City Planners drew up for a downtown sports and entertainment district akin to Times Square, including flashy LED signs that are an extra boon for developers.
By 2018, the towers had topped out, but progress soon came to a standstill.
Oceanwide Holdings ran out of money and walked away from the project in 2019, leaving Lendlease and dozens of other subcontractors in the lurch for unpaid work. The property began accumulating liens and was later hit with a series of foreclosure suits.
The development became something of a symbol for the economic pains that have belabored downtown since the COVID-19 pandemic and mounting issues with homelessness and crime in the city center. It earned the moniker “graffiti towers” several years ago after taggers trespassed onto the property and scaled to its top floors while painting windows and surfaces.
The towers were 60% complete when construction halted. And it will take another $865 million to complete them, according to an analysis by Colliers, a court-appointed broker in the bankruptcy case.
KPC is also the developer behind the Kali Hotel, which is presently under construction in Inglewood’s Hollywood Park development.
