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DigitalBridge, Reuben Brothers Fight for Century Plaza

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Mark Ganzi, David and Simon Reuben at Digital Bridge, Fairmont Century Plaza (2050 Avenue of the Stars) (Ganzi by Sonya Revell, Hotels.com, Getty)

Last July, Michael Rosenfeld defaulted on a loan of about $1.8 billion related to the redevelopment of Century City’s Century Plaza, but the Reuben brothers, who held part of the loan, abandoned it. It is said that

So another mezzanine lender fought back.

In March, a DigitalBridge-controlled entity claimed “liability” to provide an $821 million mezzanine loan to Motcomb Estates, the investment firm of David and Simon Reuben, according to New York Supreme Court filings. filed a lawsuit for violation of

After defaulting, Motcomb did nothing. Formerly known as Colony Capital, the Reuben brothers knew they would benefit DigitalBridge. Currently led by Mark Ganji — stated in that complaint.

Just before a judge dismissed Motocom’s motion to dismiss, the brothers started a foreclosure of UCC after holding out for months. The $2.5 billion Century Plaza project is currently put up for auction December 14, according to the public auction notice first reported by CoStar.

The Reubens delayed the seizure of UCC to protect their interests, according to court documents and sources familiar with the matter. Over the course of four years, the brothers held a small stake in a senior mortgage in real estate, but the project left him with more than $1.2 billion in debt.

Choosing not to act is unusual for the Reuben family, who have had no problem pursuing UCC foreclosures in the past.Last year they started foreclosure proceedings a thousand museums In Miami it was developed by a consortium including Todd Michael Glaser and in LA by the Witkoff Group and Ian Schrager’s West Hollywood Edition.

Meanwhile, DigitalBridge sought to rescue its stake in the debt by seeking a foreclosure of UCC as soon as possible.

In a June memorandum asking the court to dismiss the lawsuit, Motcomb called DigitalBridge’s claims “unfounded,” and the company is said to have failed to show true financial damages.

DigitalBridge and Reubens declined to comment, but Rosenfeld did not respond to a request for comment.

Rosenfeld has spent more than a decade developing Century City, a year riddled with construction delays, lawsuits, mounting debt and urban planning roadblocks. Now it’s a project he’s about to lose.

Fundraising from scratch

In 2008, Rosenfeld announced its first ambitious $2 billion plan to redevelop the historic Century Plaza Hotel at 2050 Avenue of the Stars in Century City. After the hotel he bought for $367 million, his new organization Next His Century Associates demolished it to make way for another tower with 130 luxury condominiums and 240 key hotels and residences. I considered replacing it.

But just two years later, after backlash from LA City Council members and the LA Conservancy, Rosenfeld scrapped the demolition plan. Instead, his company went ahead with plans for a residential tower behind the hotel. The project is estimated at $2.5 billion.

Construction finally began in 2016 after Rosenfeld won city approval and a hefty funding package. JP Morgan provided $446 million in senior loans, Digital Bridges predecessor Colony Capital provided $120 million in mezzanine financing, and EB-5 lenders also contributed $450 million together. I played pool. The Reubens also have a small stake in the Senior Loan and are eligible for first payment in the event of default.

Initial funds were not enough. Various construction delays and rising costs forced Woodridge to go back to the lenders and demand more money.

JP Morgan and Colony Capital have agreed to raise additional funding. By 2018, Colony had raised more than $500 million and delivered about $89 million in preferred stock investments, according to the March complaint.

Reshuffle stack

Delays and cost overruns worsened in March 2020. Next Century has returned to lending again and has considered restructuring its funding.

The Reubens decided to provide more funding and agreed to provide a senior mezzanine loan of up to $275 million, according to court documents.

This allowed Rubens to get over Colony with his debt stack. By default they are paid before the colony. Under the terms of the deal, they also agreed to take over as managing agent, an entity that basically ensures that the terms of the loan are met, according to sources familiar with the terms.

Colony agreed and ended up with a $550 million mezzanine loan.

At the beginning of September 2020, the final mezzanine loan amount totaled $821 million.

When The Colony signed the contract, it was in fact giving up power: Motcomb “voluntarily gave up” the opportunity to decide how mezzanine loans would be managed, enforced and administered on a day-to-day basis. The lawsuit was filed in June.

Foreclosure or no foreclosure?

In September 2021, Rosenfeld celebrated the opening of the new Century Plaza, which will be branded as the Fairmont Hotel. He successfully restored his 19-storey curved building, and in addition he added two 268-unit high-rises.

“I’ve been flapping too much and my wings are getting tired,” he said. Said Wall Street Journal last year.

Three months ago, Motcomb notified Colony (now known as DigitalBridge) that, according to court records, the borrower failed to repay both the senior and mezzanine loans in full before maturity. was doing.

By September last year, Motcomb told DigitalBridge that it had also acquired JP Morgan as a lender.

This makes Rubens the sole lender of an $890 million senior loan and a mezzanine loan worth approximately $271 million. DigitalBridge still held him a mezzanine loan worth $550 million.

“They are watering down the colony’s profits,” said a source familiar with the foreclosure. “Once it’s foreclosed, the interest rate is very low.”

Motcomb is receiving about $9 million in default monthly interest, DigitalBridge said in its complaint.

Motcomb was also involved in another foreclosure — last July, it west hollywood editionThis is a 190 key hotel owned by the Witkoff Group. Witkoff eventually avoided foreclosure by winning a refinancing package.

In lieu of UCC’s foreclosure, the brothers put forward an alternative that would allow DigitalBridge to become the sole mezzanine lender. The Ruben family then seized the property, making DigitalBridge the sole owner of the project.

DigitalBridge turned down the offer, arguing that it was too burdensome and too costly. The firm prefers a typical UCC foreclosure, where some of the debt could be recovered, and the Reuben brothers could use their existing debt to bid on the property and manage the property.

Given its status as a mezzanine lender, DigitalBridge will bid on the property in December and will be able to manage the hotel and condominium development whose units are still for sale.

In 2008, Rosenfeld said, “A property like the Century Plaza Hotel is unique. It has lasting value.”

Even if that were the case, he lost the opportunity to make a profit, no matter who was in charge of the property.

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