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Wednesday, Feb 21, 2024

Foreclosure Auction is Postponed

The foreclosure auction for Next Century Partners’ stake in the $2.5 billion Century Plaza redevelopment in Century City has been rescheduled for February.
The foreclosure on the property owned by Next Century, which is a part of developer Michael Rosenfeld’s Woodridge Capital Partners, was originally set for Dec. 14.

As reported by the Real Deal, David and Simon Reuben, via the brothers’ investment entity Motcomb Estates, reached an agreement with mezzanine lender DigitalBridge (formerly Colony Capital) and a group of EB-5 lenders to push back the foreclosure auction to Feb. 23.

After Rosenfeld had defaulted on $1.8 billion in loans, the Reuben brothers, who hold more than $1.2 billion worth of debt on the project, triggered foreclosure proceedings against Rosenfeld’s property in September.

DigitalBridge alleged in court filings that the Reubens did not act quickly following the default and delayed a foreclosure to protect their own interests. The firm sued the Reubens and Motcomb Estates in March in an attempt to salvage its $550 million mezzanine loan on the property.

Fairmont Century Plaza 2025 Avenue of the Stars Century City, CA
The Century Plaza hotel and towers.

In October, a group of EB-5 lenders also sued the brothers, alleging in court documents that they engaged in “a wrongful and tortious campaign to destroy (the EB-5 lenders’) undisputed property interest and any real prospect of repayment.”

Additionally, some 900 foreign investors each contributed $500,000 in loans in exchange for seeking a permanent visa in the U.S. through the federal EB-5 program. The U.S. EB-5 visa program allows eligible immigrant investors to become lawful permanent residents by investing substantial capital to finance a business in the U.S. that will employ at least 10 American workers.

Construction on the complex — which features two 44-story residential towers including 268 condos and 94,000 square feet of retail— was completed last year following pandemic-related construction delays.

In 2008, Rosenfeld bought the historic Century Plaza hotel at 2050 Avenue of the Stars for $367 million. Soon after, he revealed his ambitious $2 billion plan to replace the hotel with a pair of towers.

After receiving pushback from L.A. City Council and the L.A. Conservancy, Rosenfeld abandoned his intent to demolish the existing hotel and moved forward with new plans to build residential towers behind the hotel.

Construction eventually began in 2016 after Rosenfeld received city approval. JPMorgan provided a $446 million senior loan, Colony Capital provided $120 million in mezzanine financing, and EB-5 lenders contributed $450 million.

Despite the substantial loans, construction delays and cost increases forced Rosenfeld to borrow more money from his lenders.
Rosenfeld, the Reuben brothers and DigitalBridge could not be reached for comment by the Business Journal.

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