After years of stalled construction that left graffiti-scarred towers looming over downtown Los Angeles, the unfinished Oceanwide Plaza project is poised to change hands in a court-supervised sale that could reset a high-profile sign of property distress for the city.
In a filing Monday in U.S. Bankruptcy Court in Los Angeles, Oceanwide Plaza proposed selling the mixed-use development bounded by Figueroa, Flower, 11th and 12th streets to a group of investors called KPC Square for about $470 million. The deal is part of a Chapter 11 liquidation plan that would wipe out existing equity and transfer ownership to the proposed buyer, a group that plans to proceed with existing plans for the project.
“This is one of the most prominent distressed assets in Los Angeles commercial real estate, and its resolution will send a signal about how the market is pricing risk and opportunity downtown,” said Catherine Yeh, CoStar’s director of market analytics for Los Angeles. She called the proposed sale a potential turning point for lenders, developers and the city’s battered urban core.
Oceanwide broke ground in 2015 on a $1.2 billion complex of condos, hotel rooms, apartments and retail next to LA Live, but construction halted in 2019 amid funding shortfalls and distress, leaving the towers exposed to vandalism and years of deterioration as market conditions shifted.
The team of buyers led by KPC Development includes the original contractor for the project, Lendlease. KPC has built a portfolio of healthcare, mixed-use and hospitality projects across Southern California and beyond and is now completing the 300-room Kali Hotel at Hollywood Park near SoFi Stadium, positioning itself as an emerging player in large-scale Los Angeles development.
If the Oceanwide sale closes, the companies would take control of one of downtown LA’s largest unfinished projects and assume the challenge of redesigning and completing a project that was conceived in a different real estate cycle. In a marketing memorandum, Colliers said the buildings are 60% complete and projected it would cost $865 million to finish the project.
Bankruptcy sale terms
The proposed $470 million purchase price includes a roughly $400 million credit bid from secured lenders and up to $70 million in cash, according to the disclosure statement and plan of liquidation.
Under the structure, secured tax claims and debtor-in-possession financing would be paid first, followed by administrative and priority claims, while existing equity holders would receive nothing.
General unsecured creditors, many of them contractors and subcontractors, are not expected to receive cash distributions, though the filing argues they could benefit if construction resumes under new ownership.
A hearing on confirmation is scheduled for April 9, and creditors have until March 20 to vote or object.
Changing plans
Oceanwide Plaza was envisioned as a three-tower mixed-use complex with a 184-room hotel, 164 condominiums, 504 apartments, 161,000 square feet of retail and a 40,000-square-foot event center. The development was also entitled for more than 50,000 square feet of electronic signage in a bid to create a Times Square-style entertainment hub adjacent to Crypto.com Arena and LA Live.
But construction financing delays mounted as downtown Los Angeles grappled with rising office vacancies and broader economic headwinds, and work stopped in 2019 after the developer ran out of cash and funding from affiliated Chinese entities dried up.
Graffiti taggers soon covered nearly every floor of the vacant towers with spray paint, turning the project into a widely photographed emblem of downtown LA’s woes.
In 2024, Lendlease filed a petition for the involuntary Chapter 11 bankruptcy of Oceanwide to force a sale of the property.
In recent months, court-appointed professionals marketed the property to multiple prospective buyers before concluding that a private sale to KPC Square would maximize value and limit further deterioration.
New ownership
KPC Development Co. is led by founder and chairman Kali P. Chaudhuri and is based in Corona, California.
The firm is currently completing the $300 million, 12-story Kali Hotel and Rooftop Autograph Collection at 1001 Stadium Drive in Hollywood Park, the only permitted hotel within the 300-acre mixed-use district.
The 300-room hotel has topped out and is slated to open in September ahead of the Super Bowl in 2027 and the Olympic opening ceremony in 2028 at nearby SoFi Stadium.
Hollywood Park, developed by Los Angeles Rams owner Stanley Kroenke, also includes YouTube Theater, the NFL’s West Coast headquarters, apartments, retail and public open space.
KPC has described the Kali Hotel as its inaugural luxury project in Los Angeles, with additional developments planned for the area.
Lendlease has been active in the Los Angeles market beyond Oceanwide Plaza, notably developing the Habitat transit-oriented mixed-use project at 3401 S. La Cienega Blvd. in partnership with Aware Super, which includes 260 multifamily units, creative office space and retail. The project is slated to open this year.