Bonnis Properties has cured a default on a $56 million loan pertaining to a property it owns in downtown Los Angeles, avoiding a foreclosure, STOREYS has learned.
In early-June, The Real Dealreported that Bonnis Properties had received a notice of default from Ladder Capital pertaining to a $56.4 million USD loan tied to the building at 404 West 7th Street, with the outstanding amount at $64 million as of May 8.
"We've since cured that default," Kerry Bonnis, who owns and operates Bonnis Properties with his family, told STOREYS in an interview on August 22. "We're no longer in default, the loan is in good standing, and there's no issue there now. And we're not in default with any other lenders."
Bonnis adds that prior to the default, which they cured in late-June, they had informed the lender that they were potentially going to be late on an interest payment.
"In the United States, they're overzealous," he said. "Basically, we had told them that we were going to be late on part of an interest payment and that we were gonna be a few weeks late."
Formerly known as the Foreman & Clark Building, Bonnis Properties purchased the property in 2016 for around $52 million USD and turned to adaptive reuse for the historic building, with plans to convert the office building into a residential building with hotel space and apartments, before pivoting to a full hotel that's currently operated by Sonder as The Winfield.
Bonnis says they have often operated with a merchant developer mindset and that extends to this property as well.
"From day one, our intention was to sell it. Now, especially given the current interest rates, it makes sense for us and many other developers to basically take a more merchant-development approach — complete projects and visions, then put them for sale, and then move on to the next one. That's our process."
Bonnis Properties
Between the time of the default notice and the default being cured, the property at 2211 West 4th Avenue in Vancouver was announced as sold by Marcus & Millichap. The vendor was not disclosed, but the property was beneficially owned by Bonnis Properties through 2211 W4 Properties Inc. The property was sold to Toronto-based Salthill Capital for an undisclosed price.
The property is one of many that Bonnis Properties has sold or made available for purchase over the past year.
In November, Bonnis sold 728-796 Main Street — where they were planning an 11-storey building with strata and social housing, according to a rezoning application for the site — for upwards of $20 million to the Hogan's Alley Society.
Following that, as first reported by STOREYS, they listed 798 Granville Street for sale, a prominent retail complex at the intersection of Granville Street and Robson Street in the heart of downtown Vancouver. That property has not yet been sold, but there are groups actively looking at the property, Bonnis tells STOREYS.
Also on Granville Street, where the company owns numerous properties, Bonnis Properties made the decision to cancel the high-profile commercial development that was planned for 800-876 Granville Street, as first reported by STOREYS in April.
That decision was attributed to the tough office market, which has also resulted in Bonnis cancelling two other office tower projects it was developing. Those two projects are Profile Robson, planned for 600 Robson Street, and the 24-storey office tower planned for 526 Granville Street, both of which were envisioned to be strata office projects.
"The brilliance of the federal government and unprecedented multiple rate hikes, it basically annihilated that market and made it no longer feasible for people to own and occupy their office space, which is a real shame for those smaller office occupiers," says Bonnis, who adds that they have sold 600 Robson Street to an "international hotelier" and are looking to sell 526 Granville Street.
Elsewhere in Vancouver, Bonnis is also currently developing 602-644 Kingsway, which had a rezoning application for a six-storey rental building with 80 units approved by Council in June 2021. Bonnis tells STOREYS that they are currently in the process of submitting a new rezoning application for the site in the coming weeks, in order to take advantage of the new density allowed under the Broadway Plan.
