Walton Street Capital and Greenlaw Partners have lost a 350,000-square-foot office tower in Orange, after defaulting on $64 million in debt, The Real Deal has learned.
The firms signed a deed-in-lieu of foreclosure, transferring over 1 City Boulevard West to TPG Real Estate Finance Trust, according to records filed with Orange County.
By signing the deed-in-lieu, often referred to as handing back the keys, Walton Street and Greenlaw were relieved of $64.2 million in unpaid debt. TPG declined to comment, while Walton Street and Greenlaw did not respond to requests for comment.
Walton Street and Greenlaw became delinquent on the TPG loan in November, according to data from Trepp. TPG originated the loan in 2019 and then packaged it into a collateralized loan obligation.
The companies bought the property in 2013, as part of a $110 million deal for the building plus an office site in Irvine. Walton Street owned a 95 percent stake in the property, while Greenlaw held the remaining 5 percent.
Then in 2022, the firms listed the building for sale, with an asking price of $100 million, or $285 per square foot. But the catch — the building was listed as an entirely vacant property.
The loan from TPG was floating-rate, meaning Walton Street and Greenlaw started struggling with debt payments after the Federal Reserve started hiking rates in 2022. By then, the firms had hit their rate cap of 5.55 percent and were paying monthly debts on an empty building.
Deeds-in-lieu are a common outcome for distressed real estate borrowers, through which an owner will transfer the title on the property and the lender refrains from filing a foreclosure action, which is costly and time-consuming.
And TPG, a frequent real estate lender, has not been afraid to foreclose on non-performing properties. In Los Angeles last month, TPG Real Estate Capital sold a 2.3-acre multifamily development site in Playa del Rey for $56 million, just months after foreclosing on the property.