Relevant’s Hollywood hotels head to foreclosure auction
Mezz lender Machine Investment provided $72M for Thompson, Tommie projects in 2021
Relevant Group is about to lose control of two of its key Hollywood hotels, The Real Deal has learned.
Machine Investment Group, a mezzanine lender on the properties, initiated a UCC foreclosure on the 190-key Thompson hotel and the 212-key Tommie hotel in Hollywood, according to Eastdil Secured marketing materials for the auction obtained by TRD. The auction is scheduled for Dec. 21.
Relevant did not respond to a request for comment.
In April of last year, Machine provided Relevant with $72 million in mezzanine financing for both hotels, a package that was described by sources at the time as a “rescue” deal.
Machine was founded in 2020 by Andy Kwon and Eric Rosenthal, two former brokers at Garrison Investment Group, with the intention of financing distressed assets. The firm did not immediately respond to a request for comment.
At the start of the pandemic, Relevant faced cost overruns and allegations it failed to pay some of its contractors. After a scheduled opening date of 2019, the Thompson hotel eventually opened in August 2021. The Tommie hotel opened in December of last year, after similar delays.
The company, along with Hyatt, which owns both the Thompson and Tommie brands, has been embroiled in a labor dispute with union Unite Here Local 11. The union won its arbitration case, which required Relevant and Hyatt to respect unionization at the Thompson and Tommie hotels. Hyatt has since asked a federal court to vacate the decision.
No disclosures have been filed with L.A. County about whether Relevant has formally defaulted on the loan.
With UCC foreclosures, mezzanine lenders often bid on the property using the debt they hold on the development, meaning Machine Investment is likely to own the property, though others are not barred from submitting bids.
The Thompson and the Tommie are two of four Hollywood hotels Relevant Group sought to build on a few blocks between Sunset and Hollywood boulevards — the others being the Dream Hollywood and the 114-key Selma Hotel.
Further east, Relevant Group is currently looking for a joint venture partner to invest in a project to redevelop the 111-unit Morrison Hotel in Downtown L.A.