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Foreclosure delayed on Relevant’s Tommie, Thompson hotels
Extension gives developer 30 days to negotiate deal on mezzanine loan
Relevant Group has another month to either refinance or come to an agreement to quash a foreclosure push from mezzanine lender Machine Investment Group on two of the firm’s Hollywood hotels.
Machine had initiated a UCC foreclosure on Relevant’s 190-key Thompson hotel and the 212-key Tommie hotel in Hollywood, with an auction scheduled for Dec. 21.
The auction has now been delayed until Jan. 21, according to Relevant’s managing partner Grant King.
“Relevant has engaged counsel and advisors and are currently working to determine the most prudent path forward,” King said when the foreclosure was initiated in November.
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.
Given foreclosures are a common recourse for mezzanine lenders in the case of default, these lenders often find themselves owning the assets. 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.
Relevant, which has faced cost overruns and construction delays during the pandemic, also faces a number of challenges from local labor union Unite Here Local 11.
The hospitality industry union has filed federal and state labor complaints, alleging former workers at the Thompson hotel were unfairly and unjustly fired. One complaint, filed with California’s Department of Fair Employment and Housing, alleges a server was discriminated against for speaking Spanish and was called a homophobic slur by a chef at the restaurant.
In December, Unite Here Local 11 met with pension fund Missouri LAGERS — an investor in Machine — to push the fund to ask Machine to abide by an arbitration ruling requiring Relevant to participate in a labor agreement with the union.
In light of the planned foreclosure, the union “expects any successor operator of the hotel” to abide by the ruling, Unite Here said in a statement.
A number of foreclosures have popped up in the L.A. market, as loans come due. In Century City, Michael Rosenfeld’s $2.5 billion Century Plaza hotel and residential development is up for foreclosure, and in Downtown L.A., Starwood recently took over the Broadway Trade Center from investor Joel Schreiber after a foreclosure.