courtyard/jan20/bb/10 inches/mike1st/mark2nd


Staff Reporter

In a move reflecting the continued financial strains faced by many local commercial property landlords, the owners of the 967,000-square-foot Wilshire Courtyard office complex in the Miracle Mile District have sought Chapter 11 bankruptcy protection.

The Jan. 8 filing by the Wilshire Courtyard general partnership came after Bank of America which holds a first mortgage on the property, with a $165 million balance sought to take the complex back through foreclosure, according to Wilshire Courtyard General Partner Lewis P. Geyser.

Title records indicate the BofA mortgage matured last year, but hasn’t been paid off.

A partnership headed by Geyser and local developer Jerome Snyder completed the six-story, twin-tower complex at 5700-5750 Wilshire Blvd. in 1987.

Two years later as local office rents and values were peaking the developers “sold” the project for about $300 million to an institutional investment fund managed by Chicago realty operation LaSalle Partners, Geyser said.

However, the sale at LaSalle’s request was transacted through a $185 million “convertible” second mortgage that technically left the developers as the property’s owners.

The LaSalle fund had an option to convert the mortgage into full equity ownership, but elected to not exercise that option last year amid depressed market conditions.

LaSalle also arranged the big first mortgage on the property, originally with Continental Bank, a Chicago institution that BofA subsequently purchased, Geyser said.

Since its completion, Wilshire Courtyard’s 5700 building has housed the corporate headquarters of California Federal Bank, which was a partner in the development partnership until the 1989 LaSalle transactions. First Nationwide Bank recently completed its purchase of CalFed and assumed CalFed’s “master lease” of the entire 5700 building.

(The Los Angeles Business Journal is a subtenant of First Nationwide/CalFed in the 5700 Wilshire building.)

Geyser said the Wilshire Courtyard partners and LaSalle together are negotiating with investors interested in purchasing the BofA mortgage and restructuring the property’s ownership and financing.

Assuming values continue to rebound over the next five years, LaSalle’s institutional clients Illinois’ and Ohio’s public retirement systems might recover some of the equity in the property that vanished with the real estate recession, Geyser added.

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