Colliers markets the EY Plaza loan into an owner-user bid

Colliers has launched marketing of the senior loan secured by EY Plaza, on behalf of the lender, with offers due in October. The collateral is the 41-story, 968,745-square-foot tower at 725 S. Figueroa St. in Downtown Los Angeles; the debt sits in a single-asset, single-borrower securitization, and a court-appointed receiver is operating the property.

A single-asset loan, a receiver in place, and a marketed note add up to an unusually direct price test for DTLA office. With one asset as collateral and the borrower already out of control, there is no portfolio averaging to hide behind, and whatever the note fetches marks nearly a million square feet of Figueroa Street office.

Who buys in the submarket is shaping where that mark lands: purchases by Capital Group, Los Angeles County, the Los Angeles Department of Water and Power, the Southwest Carpenters Pension Trust, and L.A. Care Health Plan have shifted nearly five million square feet of DTLA inventory toward occupant ownership. Owner-users are the bid. Sean Fulp, a Colliers vice chair, frames the shift plainly: "Buyers aren't pricing Downtown Los Angeles as a submarket anymore. They're underwriting each tower on its own floorplates, tenancy and owner-user potential," he said. "That's why two buildings a few blocks apart can trade at very different values."

A loan sale is the honest way to clear this tower. An owner-user underwrites on occupancy cost — what it would spend per square foot to house itself measured against replacement cost — while a leveraged investor underwrites on in-place NOI capitalized at a cap rate. On a receiver-controlled single asset, those two numbers sit far apart, and the note's clearing price will show which one the market treats as the floor.

The last office debt trade this desk flagged was the other side of that ledger: a fully leased, renovated Edina property refinancing at 5.89% interest-only, where certainty had a price. EY Plaza's note is being marketed into the reverse, a building whose value now depends on a buyer pool that mostly intends to occupy it rather than lever it.

Office is repricing asset by asset rather than index by index, and each non-trophy trade widens the comp set. The EY Plaza assignment goes further: the debt gets marked before any deed changes hands, so the comp set widens on a note price. If October's offers land near an owner-user's occupancy math, that benchmark should start showing up in how other single-asset office maturities resolve, with recoveries tested against user demand rather than investor demand.

Colliers staffed the assignment wide, with Sean Fulp, Todd Tydlaska and Mark Schuessler as executive vice presidents and Jordan Garcia and Blake Hammerstein as associate vice presidents on investment sales, plus Matt Heyn, Ian Gilbert and Kurt Davis on leasing. Offers are due in October, and whatever that note clears at becomes the mark for the next single-asset office maturity on the board.