Century Plaza Investor Sues Mezzanine Lender
An investor in the Century City hotel, residential and retail project Century Plaza has filed a lawsuit against a mezzanine lender on the $2.5B project.
Investor Urbanite Capital’s complaint alleges that DigitalBridge Group, formerly known as Colony Capital, didn't disclose it had a restructuring agreement with the Reuben brothers, The Real Deal reported. The brothers, David and Simon Reuben, foreclosed on the project earlier this year after developer Michael Rosenfeld of Woodridge Capital Partners defaulted on about $1B worth of loans on the property, TRD previously reported.
The Century Plaza development contains a revamped hotel, the Fairmont Century Plaza, as well as two condo towers and about 100K SF of retail space across the street from the Westfield Century City mall.
In 2018, Urbanite Capital contributed $80.5M to the project, which was wrapped into a $428M mezzanine loan that Colony Capital controlled, according to the complaint.
“[Urbanite’s] agreement to participate in funding the Project was conditioned on the commitment of parties associated with Colony Capital, Inc., now known as DigitalBridge Group, Inc., to properly control and manage [Urbanite]’s investment and the Mezz Loan,” the complaint stated.
The complaint alleges DigitalBridge decided in 2020 to “divest their hospitality real estate investments, including their investments in the Project, pursuant to an enterprise-wide change in strategy and despite the necessity for taking losses in the course of the divestment,” according to the complaint. As part of that decision, the company restructured the mezzanine loan, allegedly “without [Urbanite]’s consent, all at the expense of [Urbanite].”
DigitalBridge allowed Reuben Brothers Ltd. to acquire the mezzanine loan, subordinate DigitalBridge-controlled interests in the project to that of the Reubens, and “cede complete administrative control” of the loan to Motcomb Estates Ltd., an entity owned and controlled by the Reubens, the complaint alleges.
Urbanite said it was not notified of the handing-off of control, and the complaint alleges DigitalBridge deliberately hid the facts from Urbanite because it knew Urbanite would have pushed back on DigitalBridge’s actions.
The complaint was filed in August in Los Angeles Superior Court. Representatives for DigitalBridge and Urbanite Capital could not immediately be reached.
