In the ever-evolving landscape of commercial real estate, another Downtown Los Angeles office tower has succumbed to the prevailing trends affecting traditional office spaces. The 41-story EY Plaza, once valued at $446 million just three years ago, has now experienced a significant downturn, with its current value plummeting to $210.7 million, according to a recent Trepp report. This decline places the building well below the $275 million commercial mortgage-backed securities (CMBS) loan it secures from Morgan Stanley (MS) and Wells Fargo (WFC).

The latest twist in this financial tale unfolded when the owner, a Brookfield-managed fund known as Brookfield DTLA Fund Office Trust Investor, failed to make payments, resulting in a default on the 920,308-square-foot office building located at 725 South Figueroa Street. Subsequently, the property was sent to special servicing. Trepp’s report also highlights the existence of a $30 million mezzanine loan on the property, held outside of the CMBS trust. Consequently, the negative equity on the asset has now escalated to approximately $90 million.

The revelation of this financial setback coincided with the release of December servicer data, prompting Trepp to note that “the proverbial other shoe dropped.” In response to these challenges, Gregg Williams of Trident Pacific Real Estate has been appointed as the receiver for EY Plaza. Williams has retained Colliers as the exclusive leasing and property manager. As of now, neither Colliers nor Williams has provided immediate comments on the matter.

This downturn is not an isolated incident for the Brookfield fund, as it has defaulted on financing associated with two other nearby skyscrapers—the Gas Company Tower and the 777 Tower. Collectively, the loans tied to these properties amount to a staggering $784 million. The Gas Company Tower has also been placed in receivership, experiencing a significant 57 percent decrease in its value.

The shifting dynamics in the commercial real estate market and the broader decline in demand for traditional office spaces are undoubtedly leaving an indelible mark on iconic structures like EY Plaza. As stakeholders navigate these challenging times, the future of these once-thriving office towers remains uncertain.