Northwind Group has originated a $132 million first-mortgage acquisition loan for 333 S. Grand Ave., a 55-story Class A office tower in the Bunker Hill submarket of Downtown Los Angeles. The Manhattan-based real estate private equity firm and debt fund manager structured the financing to support the purchase of the property, known as Wells Fargo Center North, which totals more than 1.4 million rentable square feet. The loan backs the acquisition by 601W Companies, which is buying the tower out of foreclosure, according to published reports.
In addition to the main loan, the financing package includes a $48 million “good news” facility earmarked for future leasing costs. That additional capital is intended to fund tenant improvements and leasing commissions as the new ownership works to attract and retain occupiers in the tower. Northwind noted that both the acquisition financing and the leasing facility are designed to give 601W flexibility to invest in the building’s competitive positioning over time.
The deal represents Northwind’s first transaction in Los Angeles and its fifth loan to 601W. Earlier in the year, Northwind also provided a first-mortgage loan supporting 601W’s acquisition of 175 W. Jackson Blvd. in Chicago. In both cases, Northwind said the assets were acquired at a significant discount to historical pricing levels, highlighting what it described as a broader repricing of Downtown Los Angeles office properties in recent years.
Northwind founder and managing partner Ran Eliasaf said older office buildings with owners that have higher cost bases can struggle to fund the level of tenant improvements and leasing commissions that the current market requires. By contrast, he noted that the borrower in this transaction is entering with a different cost basis and with a dedicated pool of leasing capital, positioning it to compete actively for new tenants. Eliasaf added that the existing fundamentals at Wells Fargo Center North provide a strong starting point for this capital plan.
The acquisition was arranged by Rael Gervis of Meridian Capital Group. Northwind was represented in the transaction by attorney John Vavas of Polsinelli Law Firm. The foreclosure status of the property and the discount to historical pricing underscore the changing dynamics for office assets in Downtown Los Angeles, even as capital remains available for well-capitalized sponsors executing business plans at institutional-quality towers.
