Reuben brothers look to foreclose on Witkoff’s West Hollywood Edition

Billionaire Brits are mezz lenders on trendy hotel

Los Angeles /
Jul.July 14, 2021 01:26 PM
Witkoff Group CEO Steve Witkoff, Simon and David Reuben and The West Hollywood Edition (Getty, Witkoff)
Witkoff Group CEO Steve Witkoff, Simon and David Reuben and The West Hollywood Edition (Getty, Witkoff)

The West Hollywood Edition may soon be up for grabs, The Real Deal has learned.

The trendy 190-key hotel at 9040 Sunset Boulevard, owned and developed by the Witkoff Group and Howard Lorber’s New Valley, is being marketed for auction through a Uniform Commercial Code foreclosure, according to marketing documents seen by TRD. Both the Witkoff Group and New Valley declined to comment.

Motcomb Estates, an investment vehicle for billionaire brothers Simon and David Reuben, is pursuing the UCC foreclosure against the property on behalf of Brentwood-based Ascendant Capital and the Reuben brothers, a spokesperson for the Reubens said. Ascendant could not be reached for comment.

The brothers are major real estate investors in the U.K. who have made recent moves in the U.S., including a $275 million mezzanine loan for Michael Rosenfeld’s Century Plaza redevelopment and a $170 million deal to buy a New York retail property from SL Green Realty. They helped Ascendant finance a mezzanine loan on the Edition, the spokesperson added.

Mezzanine loans take a junior position to senior loans in the capital stack, and tend to carry higher interest rates. Through a UCC foreclosure, mezzanine lenders can instigate a private or public auction to put a property up for sale if a borrower defaults — without going through a formal court process. Often, the lender will then bid on the asset using their existing debt and take control of the property.

Over the past year, lenders have sought to take advantage of distress in the market by initiating more of these foreclosures in an attempt to take control of properties.

The Reuben brothers are no stranger to pursuing foreclosures. In March, they sued to foreclose on 15 unsold units at One Thousand Museum, a luxury condo tower in downtown Miami. The developers of the property called the lawsuit “completely unexpected.”

For the West Hollywood Edition, the auction will be held via Zoom on Sept. 10. All 190 hotel rooms, along with about 11,500 square feet of event space and four restaurants, will be sold to the highest “qualified” bidder, according to the marketing documents sent by brokerage Eastdil Secured.

In the case of a foreclosure, Marriott will continue to manage the hotel under its Edition brand, according to agreements between the Witkoff Group and Marriott.

Witkoff bought the property in 2014 from Marriott for $42 million, records show. The company then scored a $260 million construction loan on the property from Cornerstone Real Estate Advisers and opened the hotel in 2019. The development also includes 20 luxury residential units — not included in the foreclosure.

Just before the hotel opened, the developers landed a $148 million loan from Deutsche Bank for the hotel, and a $57 million mezzanine loan from Korean investors Mirae Asset Securities and NH Investment.

The project also looked to raise EB-5 funds.





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