$26.7M Santa Monica Office Loan Moves to Special Servicing Amid Cash Flow Shortfall
Morningstar Credit reported that the loan tied to Santa Monica’s historic Clock Tower has moved to special servicing after missing its May maturity deadline, as reported by The Real Deal.
Valued at $26.7 million, the loan originated in 2015 and is backed by the 12-story Art Deco office tower at 225 Santa Monica Boulevard, owned by Rockwood Capital. Once fully leased, the 53,500-square-foot property has struggled with falling occupancy and income.
By September 2023, occupancy had dropped to 43 percent, down from full tenancy at issuance. The departure of Shegerian & Associates, previously the second-largest tenant with 16 percent of the leasable space, further eroded stability.
Financial performance has deteriorated as the net operating income fell to $570,000 in 2023, down from $1.7 million a year earlier, while net cash flow declined to $432,000 from $1.6 million, according to Trepp. Underwritten projections have gone unmet for five straight years, and the asset no longer generates enough revenue to meet debt service.
Despite ongoing financial pressure, Rockwood remains current on loan payments as of June.
Rockwood acquired the property in 2019 for $58 million—roughly $1,084 per square foot—from Sorgente Group of America, which had paid $34 million in 2013.
