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First Republic’s failure leaves “gaping hole” in market
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Welcome Group scores $37M construction financing for Pasadena hotel
Project, on land owned by Mark and Arman Gabay, would sport Marriott AC Hotels brand
Welcome Group’s Amar Shokeen, Mark and Arman Gabay and the site at 550 East Colorado Boulevard (Welcome Group, Google Maps)
Welcome Group, a development firm run by Arjun Shokeen, has scored construction financing to build a hotel in Pasadena.
The El Segundo-based company secured a $36.8 million, three-year loan to build a 194-key hotel, according to JLL, which brokered and announced the deal on Tuesday.
JLL declined to disclose the lender, but records filed with L.A. County show East West Bank provided the loan.
Welcome Group acquired the leasehold interest in the property from Charles Company — the firm run by developers Mark and Arman Gabay — in April, records show.
Arman Gabay made headlines for his arrest on federal bribery charges in 2018. Last year, he pleaded guilty to paying an L.A. County employee $1,000 a month in bribes and kickbacks for more than six years and agreed to pay a $1.15 million fine.
The property, located at 550 East Colorado Boulevard, is currently a parking lot and was once slated for redevelopment into a 110,000-square-foot medical office building. In 2021, Charles Company and Welcome Group announced a change in plans — a six-story hotel to be branded under Marriott’s AC Hotels flag.
In light of the collapse of Silicon Valley Bank, Signature Bank and First Republic Bank — three regional banks — other regional lenders have pulled back on both commercial mortgages and construction financing.
The deal for the Pasadena hotel closed on April 20 — almost two weeks before First Republic was seized by the Federal Deposit Insurance Corporation and sold to JPMorgan Chase.
Sources familiar with the bank’s operations say East West Bank is still handing out loans for commercial developers and owners.
East West Bank has also not exceeded regulatory thresholds for commercial real estate lending, according to Reuters, which cited data from Trepp. Other banks including PacWest and New York Community Bancorp have exceeded concentration thresholds, which are put in place to mitigate risk.
Last year Welcome Group paid $49 million to buy the Hyatt Place El Segundo, a 143-key property near LAX.
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