David and Simon Reuben acquired the Century Plaza development from Michael Rosenfeld for a bid of $1B at an April 6 foreclosure sale, an amount that is about 40% of the $2.5B it cost to build the Century City complex in Los Angeles.
The brothers were the only bidders at the foreclosure auction, according to a report in TheRealDeal. The winning credit bid equaled a portion of the senior and mezzanine debt on the hotel property.
Rosenfeld still owns 197 condo units at the property. The UK-based Reuben brothers entered into a forbearance agreement with Rosenfeld to ex0tend the maturity date of the senior loan on the remaining Century Plaza condos by another 12 months, the report said.
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Rosenfeld defaulted on $1.8B in loans in July 2021. The Reuben brothers held an $890M senior loan and a $271M mezzanine loan on the property.
The brothers from Britain face an additional $55M in property transfer taxes because the sale closed after Measure ULA went into effect on April 1. Measure ULA which imposes a 5.5% tax on all commercial and residential sales over $10M.
Foreclosures are not exempted from the property transfer tax.
In March 2022, DigitalBridge filed a lawsuit against David and Simon Reuben's investment vehicle, Motcomb Estates, alleging it "violated its responsibilities" in servicing the $821 million mezzanine loan, according to a filing with New York Supreme Court.
Just before a judge denied Motcomb's motion to dismiss, the brothers initiated a UCC foreclosure, after holding out for months. The $2.5 billion Century Plaza project was sent to the auction block.
Over the course of four years, the brothers increased a small stake in the senior loan for the property to holding more than $1.2 billion worth of debt on the project.
In 2008, Rosenfeld proposed a $2 billion plan to redevelop the historic Century Plaza Hotel at 2050 Avenue of the Stars in Century City. After purchasing the hotel for $367 million, his entity, Next Century Associates, planned to replace the hotel with a tower with 130 luxury condos and another with a 240-key hotel, plus residences.
Two years later, plans to tear down the hotel were dropped. Rosenfeld went forward with plans for residential towers behind the hotel, a $2.5-billion. Construction began in 2016, but was not completed until 2021.
The restored 19-story hotel, now branded as a Fairmont Hotel, opened in September 2021, along with two residential towers with 268 units.
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