WS Communities Hands Keys Back for $1B Debt on L.A. Apartments
Deeds-in-lieu on 28 buildings nearly half of firm's Los Angeles County portfolio.
One of the biggest landlords in Los Angeles is handing over the keys to lenders for nearly half of its Los Angeles County portfolio.
WS Communities is signing off on deeds-in-lieu of foreclosure on 28 multifamily buildings and development sites, encompassing about $1.1B in debt.
Madison Realty Capital assumed control of 20 properties, with Hankey Capital taking six buildings and Lightstone Capital taking over three properties. Madison and Lightstone are based in NYC, according to a report in TheRealDeal.
Dees-in-lieu encompass more than 870 units, with WS Communities remaining portfolio totally about 1,100 units.
In Los Angeles and Orange County, an estimated $21B in debt back by commercial real estate is scheduled to mature in 2024, which is a bit less than the $30B that came due last year in those two markets, according to Morningstar Credit Analytics data. The debt coming due is tied to 400 properties, and nearly $3B has been paid off.
Nearly 60% of the balance coming due in 2024 already is in distress, according to Morningstar. These loans either are already in special servicing or are on watch lists, with at least $250M worth of property already delinquent.
Morningstar’s data indicates that 30% of the loans coming due in the SoCal markets are backed by retail properties, including malls, 22% is backed by office buildings and 19% is debt for multifamily properties. The balance is spread over several sectors.
Several large loans coming due in 2024 are backed by office towers in Downtown Los Angeles, where several iconic towers went into receivership last year.
A $377M loan backed by Bank of America Plaza, owned by Brookfield, comes due in September; a $300M loan backed by Rising Realty’s 1M SF One California Plaza comes due in November.
Multifamily transactions volume plummeted by 63% in 2023, dropping to $4.1B from the $11B recorded in 2022.
The Greater Los Angeles multifamily market concluded the fourth quarter of 2023 with an overall occupancy rate of 95.3% and an average effective rent of $2,176, according to a Q4 market report from Colliers.
Average rents have declined for two consecutive quarters. However, rents currently are 10.5% higher than pre-pandemic levels, the report said.