With The Park Lane Hotel hanging in the balance, developer Steve Witkoff and the U.S. Department of Justice have petitioned a federal judge to oust Malaysian businessman Jho Low from the project.
In a joint motion filed in Los Angeles, the DOJ and Witkoff are seeking approval for their plan to sell Low’s 55 percent stake in The Park Lane, allowing Witkoff to move forward with development. Without a sale, court papers said, the hotel faces “default, loss of financing arrangements, and foreclosure.”
Low, who was accused of siphoning hundreds of millions of dollars from a state investment fund known as 1 Malaysia Development Bhd., or 1MDB, allegedly used those funds to purchase art, a private jet and real estate in Beverly Hills and New York — Including The Park Lane.
Witkoff has not been accused of wrongdoing, and court papers say he cut a deal with the DOJ in September and has been cooperating with authorities.
Federal prosecutors moved last year to seize assets held by Low, Including The Park Lane and several other high-end condos in New York.
Witkoff — along with investors Harry Macklowe and Douglas Elliman chief Howard Lorber — bought The Park Lane in 2013 in a deal that valued the property at $654 million. Low provided a majority investment with “proceeds derived from or involved in fraud,” according to court papers.
Plans stalled when the U.S. government moved to seize Low’s assets in July, preventing the developers from nailing down financing. But The Park Lane‘s cash flow isn’t enough to pay expenses related to development and to stay current on the site’s $480 million in debt, which comes due this year. Witkoff issued a capital call to investors, but Low defaulted on his stake, according to court papers.
Thus far, the developers have come up with the cash to stay current on its bills, according to the Journal. If Low’s stake is sold, court papers said, Witkoff and the other investors would reimbursed for Low’s share plus 12 percent interest.
Court papers said Low sold 45 percent of his 55 percent stake in the hotel to Mubadala Development Co., an Abu Dhabi sovereign-wealth fund. Mubadala recently began “to discuss the purchase” of Low’s remaining stake, subject to court approval, the Journal reported. [WSJ] — E.B. Solomont