Rialto Capital, acting as special servicer for CMBS bondholders, has hauled Santa Monica developer Redcar Properties into court over an alleged default on a roughly $15 million loan tied to two Chinatown creative office buildings. In a complaint filed in mid June, the company is asking a judge to let it foreclose on the properties and appoint a receiver to run them, pointing to marketing materials and court filings that show the buildings are only about half leased and that debt payments stopped in January 2026.
Lawsuit turns up heat on Redcar
According to The Real Deal, Rialto alleges Redcar owes roughly $15 million, that the borrower stopped making scheduled payments in January, and that the loan was transferred to special servicing about a year ago. The complaint asks the court to foreclose on the properties and to appoint a receiver to take control of the buildings while legal remedies are pursued.
Leasing numbers tell the story
The marketing package for 837 N Spring and 1135 N Alameda shows the two buildings total about 40,921 square feet and were roughly 54.6 percent leased, with a rent roll producing around $864,000 in base rent annually. Per Showcase, NAC Architecture’s Chinatown lease is listed at $3.75 per square foot per month, or about $52,043 a month, and the marketing materials carried an asking price of $18,995,000.
Redcar’s recent string of setbacks
The Real Deal also reported that Redcar handed back creative offices in Santa Monica to lender Bank OZK earlier in 2026 after owing about $50 million, and that Jim Jacobsen, Redcar’s chairman and CEO, was a guarantor on the Chinatown loan. That earlier surrender, combined with recent neighborhood sales of Redcar developed properties, highlights mounting pressure on the developer’s portfolio.
What a receiver could do on the ground
If a judge appoints a receiver, a court approved manager could step in to collect tenant rents, oversee maintenance and leasing, and run the buildings while the lender pursues foreclosure or a sale, according to Lawyers.com. Receiverships are a common tool in commercial foreclosures when lenders want to protect income and preserve property value while a case works its way through the courts.
Why Chinatown is watching this closely
The lawsuit puts local tenants and nearby businesses on notice that ownership and day to day operations could shift, and it underscores pricing and leasing pressure in the downtown Los Angeles creative office market. With the loan not set to mature until 2028, there is still room for a recapitalization or sale, but the missed payments and push for a receiver signal that this corner of Chinatown is likely to stay on investors’ and neighbors’ radar in the months ahead.
