A stake in a luxury Los Angeles mixed-use property is headed to the auction block later this year in the wake of the pandemic's disruption on the hospitality business and a weakening high-end residential market.
Next Century Partners, affiliated with to Los Angeles-based developer Woodridge Capital Partners, which spearheaded the $2.5 billion renovation and redevelopment of the high-profile Century Plaza hotel at 2025 Avenue of the Stars, is set to lose its stake in the project in a uniform commercial code foreclosure auction scheduled for Dec. 14, according to a public sale notice. Typically initiated by a mezzanine lender, a uniform commercial code foreclosure is a type of proceeding that avoids a court process.
Woodridge, headed by CEO Michael Rosenfeld, bought what had been the 726-room Fairmont Century Plaza hotel in June 2008 for $366.5 million before embarking on the multibillion-dollar hotel, condo and retail redevelopment of the property, according to CoStar data.
The project, which got underway in 2016, was backed by roughly $1 billion in construction financing, including a $446 million senior loan from JPMorgan Chase, $120 million mezzanine financing from an investment vehicle managed by Colony Capital and $450 million of EB-5 financing provided by CMB Export LLC Regional Center, according to a statement from New Century.
Brothers David and Simon Reuben, billionaire British industrialists and philanthropists, lent $275 million in September 2020 in senior mezzanine debt for the project, according to The Real Deal.
The redevelopment, completed last year, resulted in the top two floors of the 19-story hotel becoming 63 high-end, for-sale apartments and two, 44-story towers with 268 luxury residential units, according to the Wall Street Journal.
The revamped property features roughly 400 hotel rooms, 331 residential units and about 94,000 square feet of retail and restaurant space, according to CoStar data. Twelve of the tower units are listed for sale for between $1.8 million and $11.8 million, according to the property's website.
Time, unfortunately, was not on Woodridge's side. The mixed-use property opened in the middle of the pandemic, bringing the hospitality sector to a halt for a time, and the residential market softened, too, with Southern California home sales falling nearly 20% year to date through August compared with 2021, according to the California Association of Realtors.
The main creditors were not listed in the public sale notice, and it was not clear which entity initiated the foreclosure proceeding, though the auction is being organized on behalf of Motcomb Estates Ltd., which is related to the Reubens.
Rosenfeld did not respond to multiple requests to comment from CoStar News. The project's lenders known to CoStar News did not respond to requests to comment.
Storied History
Located in L.A.'s Century City neighborhood west of downtown, Century Plaza and the 19-story hotel has long been frequented by celebrities and politicians, including President Ronald Reagan, who stayed at the hotel so often it was called the Western White House.
The Woodridge project initially faced opposition from the neighborhood, which published reports say included actress Diane Keaton, which delayed the approval process until 2013, according to the Wall Street Journal. The original plans called for razing the landmark hotel, built in 1966, before those plans were scrapped.
The project is also opposite the headquarters of Creative Artists Agency, which earlier this year it announced plans to anchor a 37-story tower to be built across the street from its current office on the Avenue of the Stars, expected to be completed in 2026.
The auction is expected to attract a large institutional or international fund, said Alan Reay, president of Irvine hotel brokerage Atlas Hospitality Group. Reay said Century Plaza's location is exceptional and the real estate is turnkey, which makes it an attractive investment for a buyer with a long-term view.
"In the development business, you've got to have super deep pockets," Reay said. "If you time it right, you make a fortune. If you miss it, you get wiped out."
Century Plaza isn't the only Woodridge Capital-owned hotel to run into financial trouble. The loan related to the company's roughly 134-room Huntington Hotel at 1075 California St. in San Francisco is in default, according to The Mercury News. That hotel is currently closed.