$100M Debt Tied to Ron Burkle’s The Line LA in Default

Lender Corten Real Estate Partners is threatening to show Ron Burkle the door at Soho House & Co.’s swanky The Line LA hotel in Koreatown, The Real Deal has learned.

RECP Sydell Wilshire — a Delaware shell company tied to the billionaire investor — defaulted on a $100 million loan backed by the 384-key hotel at 3515 Wilshire Boulevard last month after it failed to make its Jan. 6 operating shortfall reserve payment, according to property records filed in Los Angeles County. Corten could put the property up for sale within 90 days, according to the notice.

It’s unclear if there are other investors behind RECP Sydell Wilshire who are also on the hook for the debt.

Burkle’s Yucaipa Companies and former joint venture partner Andrew Zobler’s Sydall Group bought the rundown former Wilshire Plaza Hotel in 2011 and transformed it into The Line LA. Sydall no longer has a stake in the property or the hotel.

Frank Quintero, principal at Yucaipa, had no immediate comment on the default notice, and Corten Principal Brandon Flury, who signed off on the hotel’s $100 million refinance in 2022, did not return multiple phone calls and emails from TRD.

Kristal Swope, general counsel for Sydell Group, said in an email, “neither Mr. Zobler nor Sydell Group has any current interest in RECP Sydell Wilshire, LLC or the debt, equity, or operations related to the Line LA.”

What’s clear is Burkle and Zobler have racked up a mountain of litigation against each other and divested from their joint venture over the course of 14 tumultuous years. The warring parties finalized their separation in 2021, when Sydell sold its entire stake in The Line’s hotel management agreements to Soho House & Co. — where Burkle is a controlling stockholder and serves as board chair. He’s also currently backing a bid to take the global hospitality group private.

But long before they became sparring partners, Burkle and Zobler had a promising start as hotel developers. Their joint venture was best known for opening the buzzy NoMad Hotel in Manhattan in 2012.

For Burkle — a California grocery magnate and godfather to rapper Sean “Diddy” Combs’ children — the partnership with Sydell sparked an interest in hospitality investment. Yucaipa went on to acquire a majority stake in sub rosa elite social club Soho House.

Yucaipa and Sydell meanwhile launched The Line hotel brand and soon had a pipeline of properties under development targeting creative business travelers in Los Angeles, Washington, and Austin, Texas.

But behind the scenes, the partnership was on the rocks. Burkle tried in vain to oust Zobler from Sydell. Zobler responded by suing him in 2017.

Two years later, Burkle shot back with a lawsuit in California Supreme Court claiming Zobler’s “shoddy management” of The Line LA had taken a financial toll on the joint venture, according to the complaint. Burkle claimed he “suffered millions of dollars in lost revenue” before moving to dismiss the case several months later.

Burkle sold his 50 percent stake in Sydell to MGM Resorts International for an undisclosed amount in August 2019. He still retained an ownership stake in the properties that house the hotels, including 3515 Wilshire Boulevard, the Wall Street Journal reported at the time.

Burkle’s Yucaipa scored a $100 million loan from Corten to refinance The Line LA in 2022.

The current balance of the loan tied to the Wilshire Boulevard property is unclear. Institutional Property Advisors’ Jordan Ray, who brokered the 2022 refinancing along with Steven Buchwald, Jamie Matheny, and Lexington Henn, did not respond to a request for comment.