Canadian investment firm Bonnis Properties has defaulted on a loan tied to the Foreman & Clark building in Downtown Los Angeles, a multifamily property currently occupied by short-term rental startup Sonder, The Real Deal has learned.
Bonnis is in default on a $56.4 million loan from Ladder Capital, tied to the 147,000-square-foot building at 404 West 7th Street, according to a notice filed with Los Angeles County. A foreclosure auction on the property can be scheduled no earlier than Aug. 8, under state rules.
Bonnis actually owes more than the loan’s balance. As of May 8, the firm owed about $64 million because of interest and late fees.
Bonnis, which did not respond to a request for comment, bought the 13-story office building for $52.5 million, and converted it into 125 apartments. The firm then refinanced with the loan from Ladder Capital in 2021, records show.
Ladder’s loan was used to refinance construction debt and help fund the lease-up of the property.
But by 2023, the property was renamed The Winfield and had emerged as a 125-key, short-term rental hotel, operated by the San Francisco-based startup Sonder. Rooms at the property start at $158 per night, according to its website. Sonder did not respond to a request for comment.
The building, registered as a historic-cultural monument with the city, was built in 1929 for the department store Foreman & Clark, which occupied the building until the 1960s.
Almost all of the 8,500 square feet of retail space at the building is currently available for lease, according to a CBRE listing. Bonnis wants rent between $6.50 and $9.75 per square foot a month at the property.
Sonder, once valued at $2.2 billion when it went public through a special purpose acquisition company in 2022, has tried to shed some of its master leases recently in an effort to boost its cash on hand.
In 2023, the firm reported negative cash flow of $108 million, according to a financial filing. Sonder did not respond to a request for comment.
Sonder also failed to file its annual report with the U.S. Securities and Exchange Commission on time this year, meaning it’s out of compliance with Nasdaq listing rules.
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