Neil Shekhter loses three more Santa Monica apartment buildings

Bank of Southern California forecloses on 24-unit portfolio

Neil Shekhter has lost three more apartment properties, this time to foreclosure. 

Bank of Southern California foreclosed on 1007 Lincoln Boulevard, 1038 10th Street and 1516 Stanford Street, according to a trustee’s deed filed last month. 

Shekhter owed $15.8 million in unpaid debt tied to the three properties, which total 24 apartments, according to the deed. 

Bank of Southern California foreclosed with a credit bid of $9.5 million at a public auction, coming out to about $394,000 per unit.

The bank was also able to acquire the properties for less than what Shekhter paid for the three between 2015 and 2016. Shekhter paid $10.6 million total, according to property records filed with Los Angeles County.

Bank of Southern California did not respond to requests for comment. Shekhter and WS Communities CEO Scott Walter have previously declined to comment on the deeds-in-lieu and did not respond to a request to comment on this story. 

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The foreclosures come a couple of months after Shekhter’s firm, WS Communities, lost nearly half of its portfolio through deeds in lieu of foreclosure, a non-judicial process that allows a borrower to hand over properties to lenders in exchange for debt forgiveness. 

Entities controlled by Shekhter handed over almost 30 parcels to lenders Madison Realty Capital, Hankey Capital and Lightstone Capital — across different transactions — relieving more than $1 billion in unpaid debt. 

Bank of Southern California’s foreclosures come after the bank had sued Shekhter-owned entities and three of Shekhter’s sons — Alexander, Adam and Alan — claiming default on a $16.2 million business loan tied to the properties. 

Shekhter and his sons obtained the loan in 2022, just days after the Federal Reserve hiked rates for the fifth time that year. The interest rate on the debt started at 7.25 percent, higher than the average mortgage rate at the time, and ballooned to 9.5 percent a year later.

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Shekhter’s sons each signed the loan with unlimited personal guarantees with recourse provisions, according to court documents, meaning if the entities could not pay back the money, the three of them would have to. 

Bank of Southern California successfully pushed the court to appoint a receiver on the three properties, which will handle leasing, rent collection and evaluate financial statements. Attorneys for Shekhter and his sons have not responded to the lawsuit, which is still pending.