Zach Vella’s Vella Group has defaulted on a $79 million loan from Madison Realty Capital tied to a portfolio of four industrial and office properties in the South Bay of Los Angeles, The Real Deal has learned.
Vella owed at least $1.4 million under the loan at the end of April, according to a notice of default filed with L.A. County in May.
Under state law, Madison Realty could schedule a foreclosure on the 206,000-square-foot portfolio on or after Aug. 4 — three months after the initial notice.
Madison Realty initiated a foreclosure and assigned Fidelity National Title Insurance Company to handle the proceedings, according to records filed with L.A. County. But the New York-based lender changed its mind.
“Madison has opted to engage in discussions for a cooperative workout with the borrower and as a result decided to temporarily suspend the foreclosure process,” a spokesperson for Madison Realty Capital said in a statement.
Zach Vella did not respond to a request for comment.
Madison Realty provided the $79.1 million loan to Vella Group in 2021 — when interest rates were low. It’s unclear whether the loan was floating-rate, which would mean debt payments rose when the Federal Reserve hiked rates in 2022.
The loan was originally tied to five properties, though Vella has since sold off one — 1010 Sandhill Avenue in Carson, records show. The Southwest Regional Council of Carpenters paid $46 million, or about $540 per square foot, for the building in May 2022.
The other four buildings, located in Hawthorne, are still owned by Vella Group. They are 12536 Chadron Avenue, 13100 Yukon Avenue, 13040 Cerise Avenue and 13007 Yukon Avenue. The latter is a development site, which is still available for lease, according to LoopNet.
Zach Vella is a New York-based developer, whose has worked on projects including the Magic City Innovation District in Miami and numerous spec mansions.