Developer Norm Kravetz, who is best known in Warner Center for building The Trillium complex on Canoga, has faced major difficulties with his office portfolio post-COVID.
The Real Deal is reporting that his Realty Bancorp is delinquent, and the office portfolio is worth half as much as it was at underwriting six years ago.
Locally Realty Bancorp currently owns Topanga Warner Financial Center, Calabasas Commerce Center, 29899 Agoura Road, 29903 Agoura Road, 29901 Agoura road and Northridge Retail Plaza. It sold the property at Erwin and Owensmouth just recently to LADWP (see story previous page).
The valuation of these properties was recently appraised at $47.8 million, as compared to $101.6 million in 2019, according to Morningstar Credit. The Real Deal estimated the value to be $138 per square foot, and the debt attached to the portfolio at $67.3 million, making the holdings worth less than the debt balance attached to it. The Real Deal said the mortgage-backed securities debt landed in special servicing earlier this summer.
Kravetz is not alone in this market. Post-pandemic, the greater Los Angeles commercial market has a 24.1% office vacancy rate, with more employees working from home, tenants needing less space or moving to newer properties with more amenities to lure employees back to the office.
Realty Bancorp’s property at 29899 Agoura Road was the headquarters for the Los Angeles Rams, but Kroenke is moving the operation to the old Anthem property he is developing in Warner Center. The Rams lease represented 30% of the space and expired in February.
The Real Deal reported the total occupancy for Realty Bancorp’s properties declined to 72% in June from 98% at the underwriting, with a net operating income of $3.1 million, down from $6.3 million. Kravetz is said to be asking for a short-term forbearance, or a temporary suspension of loan payments for a period of time. The special servicer is reviewing the request and working towards a solution.
Kravetz has a long history in the West Valley. He was appointed to the Citizens Advisory Committee to create the Warner Center Specific Plan and the Warner Center Transportation Specific Plan. He is past president of the Warner Center Association and began his development career in 1971.
