A stake in the $2.5 billion Century Plaza Hotel redevelopment in Century City may soon hit the auction block after a foreclosure by its developer.
Next Century Partners, an affiliate of Los Angeles-based Woodridge Capital Partners, is set to lose its stake in the Century Plaza at 2025 Avenue of the Stars, CoStar News reported. A uniform commercial code foreclosure auction is set for Dec. 14.
A uniform commercial code foreclosure, typically triggered by a mezzanine lender, avoids an appearance in court.
Woodridge, led by CEO Michael Rosenfeld, bought the landmark Fairmont Century Plaza Hotel in June 2008 for nearly $367 million, with backing from New York-based D.E. Shaw.
It then launched into a multibillion-dollar hotel, condo and retail redevelopment of the property – but not before years of delays amid local opposition to the original plan to demolish the landmark hotel, while struggling to obtain financing in a post-recession economy.
The Century Plaza project broke ground in 2016 with $1 billion in construction financing, including a $446 million senior loan from JPMorgan Chase, $120 million mezzanine financing from an investment vehicle managed by Colony Capital, and $450 million of EB-5 financing provided by CMB Export LLC Regional Center, according to New Century.
Billionaires David and Simon Reuben, industrialists and philanthropists from the United Kingdom, provided $275 million in senior mezzanine debt for the project in September 2020, The Real Deal reported.
A revamped Century Plaza, completed last year, includes two 44-story towers with 268 luxury units, a newly renovated 19-story hotel and 94,000 square feet of shops and restaurants.
The redeveloped property includes 400 hotel rooms and 331 residential units, including 63 high-end, for-sale units on the top two floors of the hotel, according to CoStar. Twelve of the tower units are listed for between $1.8 million and $11.8 million, according to the property’s website.
Despite the final completion of Century Plaza, Woodridge hit a financial wall, according to CoStar News. The mixed-use property opened in the middle of the pandemic, which brought the hospitality sector to a halt.
Then home sales in Southern California fell 20 percent in the year ending in August compared with 2021, according to the California Association of Realtors.
The main creditors of Century Plaza were not listed in the public sale notice, and it was not clear which entity initiated the foreclosure proceeding, though the auction is being organized on behalf of Motcomb Estates Ltd., which is related to the Reubens, according to CoStar News.
The auction is expected to attract large institutional or international funds, Alan Reay, president of Irvine hotel brokerage Atlas Hospitality Group, told CoStar News. He said Century Plaza’s location is exceptional and the real estate is turnkey.
“In the development business, you’ve got to have super deep pockets,” Reay said. “If you time it right, you make a fortune. If you miss it, you get wiped out.”
Woodridge has run into additional financial headwinds in Northern California. This month, its historic 135-room Huntington Hotel in San Francisco closed after the developer failed to pay its mortgage of $56.2 million. The lender, Deutsche Bank, is seeking to foreclose on the loan.
— Dana Bartholomew
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