The WeWork and Downtown LA office building investor Joel Schreiber is in hot water again.
The Waterbridge Capital CEO is being sued by a company tied to a former Rockland County mayor for failing to repay a $9 million loan apparently connected to Downtown L.A.’s Broadway Trade Center. Schreiber lost the 1 million-square-foot property — his marquee asset — to foreclosure last year.
Berry Enterprises this week sued Schreiber, claiming he and his entity JS Western Member II owe about $1 million on the loan, which dates to 2016. The suit, filed in New York, also names Schreiber’s wife Chaya, who guaranteed the loan.
Many of Schreiber’s real estate moves are obscure. The loan from Berry Enterprises is no exception.
Schreiber’s involvement with Berry Enterprises dates back to at least 2013, when the family behind it, relatives of the late Olga Sosa, started gauging Schreiber’s interest in buying the estate’s properties on North 3rd Street in Williamsburg, including the Radegast Beer Hall.
Dagan Lacorte, who was Suffern’s mayor and a nephew of Sosa’s, said he negotiated terms with Schreiber at the investor’s 590 Madison Avenue office.
But Schreiber struggled to land financing. Ultimately, Schreiber paid about 30 percent of the $92.3 million cost at the 2015 closing and Berry financed the rest, according to Lacorte.
“Along the way, I wasn’t sure he was going to close,” Lacorte told The Real Deal in a 2017 profile of Schreiber.
Schreiber’s firm, Waterbridge, then sold a majority stake in the Brooklyn portfolio to a group led by Oded Norman’s Leny Group. The sales, while lucrative for LaCorte and Schreiber, led to litigation.
A group of Eastern Consolidated brokers claimed Schreiber owed them commissions. Schreiber disputed that, backed up by Lacorte, who claimed he had handled the sale.
A judge didn’t buy it.
“I find Mr. Schreiber’s affidavit to be completely incredible,” Judge Andrew Borrock ruled. “I don’t find his testimony to be credible at all.”
In 2021, six years after the deal closed, Borrock awarded Eastern Consolidated a judgment.
Web of debt
Schreiber gained fame as WeWork’s first investor, but recently has been known for legal battles. Most notably, Goldman Sachs sued Schreiber over a $20 million loan it claimed Schreiber defaulted on by selling WeWork stock he pledged to Goldman as collateral.
In June 2016 Schreiber’s Waterbridge Capital secured a $164 million loan from Jamestown to redevelop the dilapidated Broadway Trade Center. One condition of the loan was that the borrower could not incur additional debt, according to documents reviewed by TRD.
But in September of that year, Berry Enterprises lent Schreiber another $9 million. The money went to his entity JS Western Member II. Loan documents suggest the financing was for the long-vacant Broadway Trade Center.
The attorney who handled the deal for Schreiber said a separate agreement between the parties allowed his client to take on the Berry loan.
“It was all on the up and up,” Dennis Sughrue of the law firm Pryor Cashman said by email. He declined to provide the agreement to The Real Deal.
The $9 million loan was supposed to mature in 2019, but Schreiber and Berry worked out numerous extensions, pushing the date to July 2021. Berry claims Schreiber defaulted anyway.
Berry’s attempts to collect on its debt trace back to at least 2017, when it began issuing notices for a Uniform Commercial Code foreclosure sale on JS Western Member II. The entity’s value stemmed from its 10 percent ownership stake in the company controlling the Broadway Trade Center, according to the UCC notices.
In April 2022, Berry hired an auctioneer and initiated the foreclosure sale with a starting bid of $1.4 million.
One issue: The entity had become essentially worthless, because Schreiber had stopped making payments on the L.A. building’s loan in 2020, and foreclosure seemed imminent.
Yet in May, Lacorte texted TRD that all of the issues had been settled and the auction was off. Schreiber’s attorney said the foreclosure notice had been filed in error.
“Debt was paid off,” said Lacorte in a text. “Don’t want an article based on misinformation. It is now a non-issue.”
The auction was canceled at the last minute, but the new lawsuit suggests that the debt was not paid. Lacorte now claims Schreiber owes $905,325 plus $108,738 in default interest.
JS Western Member II, however, no longer owns any part of the Broadway Trade Center. Starwood Property Trust, who refinanced the office building in 2018, foreclosed in December through a $200 million credit bid. Starwood is still pursuing Schreiber for millions in personal guarantees.
Schreiber did not return a request for comment on Berry’s lawsuit and has not yet responded in court filings. LaCorte and Berry Enterprises’ attorneys also did not return a request for comment.
Schreiber is far from done in real estate. Last July, he signed a contract to acquire the Union Bank Plaza, a 40-story high-rise in Downtown L.A., from a KBS REIT. Schreiber scrambled for financing and scored at least 11 extensions, but was able to close in late March for $110 million, almost a 30 percent discount from the initial contract price.