L.A. Care Health Plan has closed on the defaulted loan tied to West7Center, the Downtown Los Angeles office and data center complex it already fully occupies as its corporate headquarters, paying roughly $125 million for a note that once totaled nearly $200 million. The deal hands the nonprofit health insurer effective control over the building at 1200 West 7th Street in City West, where its lease runs through 2035.
The purchase closes out months of turmoil for developer Rising Realty Partners, which defaulted on the loan in March 2026, according to The Real Deal. Real estate finance advisor David Tobin advised on the deal, the outlet reports, though he declined to comment further, and developer Chris Rising also declined to comment when reached.
The lender syndicate had another option on the table: Rising's outfit had submitted a competing bid to restructure and retain control of the property, but the lenders selected L.A. Care's offer instead, the same reporting notes. West7Center's roughly $200 million debt traces back to Brookfield, which originally held a $28 million piece before selling a $172 million note to the lender syndicate led by South Korea's Shinhan Bank — the portion of debt that the March 2026 default notice specifically targeted, per The Real Deal's earlier coverage of the default.
A Building Built for Both Offices and Servers
West7Center isn't a typical Downtown LA office tower. Constructed in 1983 as an operations facility for First Interstate Bank and once known as The Garland Building, the complex houses a Tier III carrier-neutral data center spread across three subterranean levels, according to LoopNet. That underground infrastructure totals more than 340,000 square feet of raised-floor space with 22 megawatts of power capacity fed directly by the Los Angeles Department of Water and Power, on top of the building's roughly 730,000 total square feet.
What L.A. Care plans to do with that data center capacity remains an open question — the health plan has not disclosed any plans for that portion of the property, per the same LoopNet listing describing the site's technical footprint. L.A. Care isn't new to the building: the health plan first leased space at West7Center before signing a 370,000-square-foot lease in May 2019 to consolidate its headquarters staff there, according to the Los Angeles Business Journal. L.A. Care now occupies the building's offices completely.
Rising's Second Downtown LA Loan Collapse This Year
The West7Center default is Rising Realty Partners' second major Downtown Los Angeles loan failure in 2026. The firm and its partners paid about $210 million for West7Center roughly a decade ago, nearly $290 per square foot, only to lose the 42-story One California Plaza on Bunker Hill to a court-appointed receiver earlier this year after defaulting on $300 million in CMBS debt tied to that tower, The Real Deal reported in March. Hoodline previously covered the fallout from that separate default in a story about a full-floor law firm lifeline for the beleaguered Bunker Hill tower.
By comparison, L.A. Care's acquisition values West7Center at roughly $170 per square foot, well below the price Rising paid in 2016. That discount echoes other recent Downtown LA trades: the Los Angeles Department of Water and Power closed on a separate downtown office tower for $92.5 million, about $130 per square foot, while Capital Group paid $210 million — about $150 per square foot — to buy Bank of America Plaza in Bunker Hill.
Public Institutions Snapping Up Discounted Towers
L.A. Care's move fits a broader regional pattern of public and quasi-public entities buying discounted Downtown LA office assets. Los Angeles County paid $200 million for the 52-story Gas Company Tower out of foreclosure in late 2024, and the Port of Long Beach closed a $36 million office tower acquisition just this month, according to reporting cited alongside The Real Deal's coverage of L.A. Care's purchase. Office vacancy across Greater Los Angeles hovered around 25% in early 2026, with Downtown Los Angeles valuations sliding to between $130 and $170 per square foot, per market data tracked by CBRE.
Nationally, distressed office sales hit a 10-year high of $4.3 billion across 168 traded properties in 2025 — a 31.3% increase over 2024 — with private buyers and owner-occupiers driving more than 55% of all acquisitions, according to CRE Daily. That trend underscores how tenants and end-users, rather than traditional developers, are increasingly becoming owners of distressed real estate in the post-pandemic market.
Headwinds for a Health Plan Anchoring Its Own Tower
L.A. Care is the nation's largest publicly operated health plan, created by the State of California in 1997 and serving more than 2.1 million Medi-Cal managed care members across Los Angeles County as of 2024, according to KFF State Health Facts. The organization is locking in long-term control of its headquarters even as it faces policy uncertainty: in July 2026, L.A. Care and other California managed care organizations raised concerns over state budget decisions that would shift roughly 2 million Medi-Cal members out of managed care and into fee-for-service delivery by 2027, per Healthcare Finance.
For now, the deal gives L.A. Care ownership leverage over the building that has housed its staff for years, even as the fate of the tower's data center infrastructure remains undecided. The West7Center transaction adds to a growing list of Downtown LA properties changing hands amid the market's steep valuation reset, a trend Hoodline has also tracked in coverage of Brookfield's exit from FIGat7th.
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