The Real Deal has learned that WeWork’s first investor, Joel Schreiber, has filed for bankruptcy on a vacant lot in a planned Metaverse Hub redevelopment in downtown Los Angeles.
Schreiber, which recently won the bidding war for Union Bank Plaza, filed a Chapter 11 petition in New York bankruptcy court ahead of a planned foreclosure sale by lender Starwood. In the filing, Schreiber said the petition was filed on an “emergency basis” because Starwood refused to extend the property’s debt of about $214 million.The foreclosure sale was scheduled for his August 9. was scheduled for the day.
“The impact of the COVID-19 pandemic over the past few years has taken a toll on intended development, Schreiber wrote in the petition. , elected to initiate this Chapter 11 litigation to prevent immediate foreclosure and to have a last chance to save the project. To reignite it, we will pursue a comprehensive new marketing approach.”
Located at 801 South Broadway, the property is a 10 story, 1.2 million square foot building. A joint venture led by Waterbridge Capital, in 2014 he acquired this asset for $123 million. Since 2017, project lender Berry Enterpises has made several attempts to sell a minority stake in the asset. The latest notice from Berry advertised a May 26th auction, which was later called off.
Starwood filed for foreclosure on the property last July. In a filing, the company argued that it was “financially impossible” for Schreiber and his partner Jack Jangana to settle their $221 million default.
Over the years, several plans have emerged for the property. After acquiring the site, Schreiber and his partner Continental Equities announced plans for a mixed-use development that will include a 200-room hotel, offices, luxury retail and restaurants. The property was subsequently put on the market with an asking price of $425 million. In February, an unnamed New York-based startup called Emcee reportedly signed a deal to purchase the property with plans to convert the space into a “metaverse hub.” increase. Schreiber has a stake in his Emcee, according to a Commercial Observer report. The transaction was not listed in the bankruptcy filing.
Schreiber is currently under contract to purchase KBS’s Union Bank Plaza office tower in downtown Los Angeles for $155 million. Schreiber could face liquidated damages of up to $7.5 million if the transaction does not go through.