The stalled $1 billion Oceanwide Plaza in downtown LA may soon be taking a step out of bankruptcy as Riverside County development firm KPC Development Co. and creditor Lendlease have agreed in principle to take over the project, in a deal valued at $470 million. The development, located at 1101 S. Flower Street, became known as the ‘Graffiti Towers’ after it stalled in 2019 when its previous owners, Oceanwide Holdings Co. Ltd., ran out of funds.
A report in The Real Deal says that the confirmation hearing for the sale was originally scheduled for early April, but was pushed to May after the City of Los Angeles submitted a request for a continuance.
Oceanwide Holdings, a publicly traded Chinese conglomerate, broke ground on the complex in 2015.
The site is highly prominent, as it is located next to the Crypto.com Arena and Los Angeles Convention Center.
The development was the first project in North America for the non-government-controlled investment firm, according to a press release from the firm from 2016. The project was intended to feature a 184-room, five-star Park Hyatt Hotel, retail, restaurants and apartments across three towers. A 166,000-square-foot open-air galleria would anchor the project, which would also include 504 residences. The project officially topped out in 2018, according to another release from the developer.
A report in DTLA Weekly says that the hotel would be housed in a 49-story tower that was flanked by two 40-story residential towers. However, the towers were left unfinished and became a cultural landmark for graffiti artists, base jumpers and tightrope walkers, which ended up costing the LAPD over $150,000 to secure the perimeter. That report also says that city officials threatened to bill the owners $4 million for graffiti removal, but the towers became a tourist attraction nonetheless.
A report in the LA Times says that Australian construction company Lendlease was the original contractor for the project, but officially halted construction in January 2019. The company filed a petition for involuntary Chapter 11 bankruptcy of Oceanwide Holdings to force a sale of the development and pay back creditors in February 2024, according to The Real Deal.
While the project was expected to be completed by 2019, it might not even be completed by the 2028 Summer Olympics, depending on the scale of the deterioration of the towers and how long it takes for the sale to close.
There is also a $40 million delinquent tax bill and unpaid municipal bills that the new owner will have to address.
Los Angeles Mayor Karen Bass said in a prepared statement that the project has become an eyesore for the city and that given its proximity to the venues where the Olympic and Paralympic games will be hosted, she and her administration are looking forward to working with the new ownership.
KPC Development is led by Dr. Kali Chaudhuri, who is also the developer of the $300 million Kali Hotel, located next to SoFi Stadium. That project is slated to be completed at the end of the year, and spans 12 stories and 485,000 square feet.
Chaudhuri was reported in 2010 to have acquired four hospitals in Orange County by purchasing their debt at a courtroom auction, according to LAist. That same report says that he was once accused of leaving 300,000 patients without care after his company, KPC Medical Management, filed for bankruptcy in October 2000.
The confirmation hearing for the sale of Oceanwide Plaza is scheduled for May 19.
