Joel Schreiber’s plan to sell the Broadway Trade Center in Downtown L.A. to a group led by Capri Investment Group’s Quintin Primo is off, according to the building’s lender, Starwood Capital.
“There is no viable sale with respect to this specific purchaser,” Starwood’s attorney said in a court filing.
Primo’s investor group missed multiple deadlines to put down the full deposit necessary to fund the deal. Schreiber’s plan to sell the property for $325 million to Primo’s group appeared to be a hail mary. And now the property faces the risk of foreclosure once again.
Starwood initiated a foreclosure in May, alleging Schreiber and his business partners defaulted on its mortgage. To stop the foreclosure Schreiber put the property into bankruptcy and blamed the pandemic for the building’s problems in the filings.
Yet, Schreiber’s project partner, the Jangana family, contested the bankruptcy and argued they never gave Schreiber consent to file. Starwood then alleged Schreiber violated his loan guarantee by filing for bankruptcy and sued him for $271.5 million. The lawsuit is still pending.
Schreiber, however, said he reached a deal to sell the property to Primo’s group, which requires the approval of the bankruptcy court. He even attached a letter from Primo in late October who said the $9.5 million deposit should be put into escrow by October 31.
Except the money never arrived. In another filing, Schreiber’s attorney said the deposit must be submitted by November 9 or else it would look for another buyer. But once again, the money never came.
Schreiber’s attorney, Kevin Nash of Goldberg Weprin Finkel Goldstein, extended the contract an additional day.
“This is the last and final extension and the contract will be terminated at that time without the deposit,” Nash said in an email to members of the buyer group.
The deposit never materialized.
Primo, Schreiber’s attorney and Starwood’s attorney did not return requests for comment.
Irredeemable
Built in 1907, The Broadway Trade Center is listed as a historic cultural monument by the city of L.A., making any potential redevelopment more difficult. Though a historical designation does not limit use of the property, project proposals require further review from L.A.’s Cultural Heritage Commission.
Redevelopment into office space may also pose challenges, given the state of the market.
About 28 percent of all office space in Downtown L.A. was vacant in the third quarter, according to Savills, higher than the county’s average of 25 percent.
Over the past year, more office space in Downtown L.A. has come on the market than has been leased, according to JLL.
And companies are racing to sell off trophy assets in the city’s financial center. Brookfield is looking to offload its 52-story office tower at 601 South Figueroa Street, while CIM has listed a 215,000-square-foot building at 801 South Grand Avenue.
Schreiber gained fame for being the first investor in WeWork. Over the years he became entangled in a number of lawsuits from brokers, investors and lenders. Goldman Sachs alleges in a lawsuit he pledged his WeWork stock to secure a $20 million loan only to sell the stock prior to WeWork going public through a SPAC.
The Broadway Trade Center is his largest real estate asset. The property secured two refinancings, one from Jamestown for $164 million in 2016 and another from Starwood for $213 million in 2018. At one point, the building was put on the market for $425 million. Startup EMCEE planned to buy the whole building at one point, but that deal never happened and the property remained vacant.
Schreiber has also sought to buy the 40-story Union Bank Plaza for $155 million in Downtown L.A., though seller KBS recently said it sees “no assurance” that the deal will go through, after Schreiber requested three extensions to close the sale.