The Reuben brothers paid $1 billion for Michael Rosenfeld’s Century Plaza development, through a foreclosure earlier this month, The Real Deal has learned.
On April 6, David and Simon Reuben placed a winning credit bid that equaled a portion of both the senior and mezzanine debt, which gave the brothers control of the hotel, retail properties and some of the condo units, according to records filed with L.A. Superior Court this week. No other bidders appeared at the foreclosure auction.
Century Plaza cost $2.5 billion to build, meaning the Reubens snapped it up for just 40 percent of the development cost.
The property’s developer, Michael Rosenfeld, still owns 197 condo units at the property — collateral covered by debt still held by the Reubens.
The U.K.-based investor brothers entered into a forbearance agreement with Rosenfeld to extend the maturity date of the senior loan on the remaining Century Plaza condos by an additional 12 months, court records show.
Rosenfeld has been in default on $1.8 billion worth of loans since July 2021, according to L.A. County property records. The Reuben brothers held about 65 percent of that — a $890 million senior loan and a $271 million mezzanine loan. At a price tag of $1 billion, more junior debt holders and equity investors may be wiped out, depending on litigation.
It’s unclear how much Rosenfeld still owes under the senior loan. If Rosenfeld’s entity defaults again, the Reubens would have to serve a new notice of default. As of right now, “there is no pending default with respect to the remaining collateral and no threat of foreclosure,” attorneys for the Reubens said in a court filing.
The Reubens also said it faces an additional $55 million in taxes, given the sale closed after L.A.’s new transfer taxes went into effect on April 1. The new measure adds a 5.5 percent tax on all commercial and residential sales over $10 million.
Though attorneys are still unclear whether the new taxes will apply to foreclosures — and the deed for Century Plaza is not yet available with the L.A. County recorder’s office — the city of L.A. has provided no exemptions for foreclosures under its current rules.
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