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Two judges have ruled that developer and real estate investor Joel Schreiber owes nearly $100M to entities affiliated with Starwood Capital Group and Goldman Sachs after they ruled he violated loan agreements.
Schreiber, who was WeWork's first investor, put up 1.56 million shares worth approximately $90M in WeWork as collateral for a $20M loan from Goldman Sachs in 2019. But the investment bank discovered later that Schreiber had sold 300,000 of those shares, Goldman Sachs claimed in a suit, which was first reported by The Real Deal.
In addition to depleting the underlying collateral, Schreiber allegedly promised other assets that were worthless such as his stake in the already-defunct startup Retail Worx, and rights to future profits of a company with a stake in a three-story Upper West Side Building that was already defaulting on its senior loan from Signature Bank.
Goldman sued Schreiber in 2021, after he failed to repay the loan. In response, Schreiber argued in court filings that Goldman had calculated the interest incorrectly.
But New York State Supreme Court Judge Andrew Borrok ruled that Schreiber owes Goldman $19.5M, plus $2.6M in interest. Borrok also barred Schreiber from selling more of his stake in WeWork, TRD reported.
On the other side of the country, another judge has ruled that Schreiber owes Starwood Capital $78.7M after his firm, Waterbridge Capital, and partner Continental Equities defaulted on payments for the Broadway Trade Center in LA, TRD reported.
Schreiber and Starwood did not respond to Bisnow's requests for comment. Goldman Sachs declined to comment.
Schreiber and Continental’s Jack Jangana acquired Broadway Trade Center for $122M in 2014 and got a refinancing loan worth $213M in 2018 from Starwood Capital. The loan was later raised to $219M.
Both Jangana and Schreiber personally guaranteed the loan by asserting they had $6M in liquid assets. But in a separate lawsuit during the same period, Schreiber claimed to have less than $1M in assets and liquidity problems.
Meanwhile, Broadway Trade Center remained vacant and in need of serious upgrades. Schreiber and Jangana defaulted on interest payments, insurance premiums and property taxes, and Starwood pursued foreclosure in May 2022.
Schreiber attempted to put Broadway Trade Center into bankruptcy and stated that a deal to sell the property fell through after would-be buyer Capri Investment Group’s Quintin Primo failed to put down a deposit. Starwood acquired the property using a credit bid during the foreclosure sale, which placed the property’s value at $200M.
Starwood also sued Schreiber saying that he still owed $71M on the loan and that his bankruptcy filing had violated his agreement with the lender. A judge ruled in Starwood's favor, ordering Schreiber to pay $78.7M, TRD reported.
Barry Sternlicht's Miami-based Starwood has an active commercial real estate lending business and has been among the lenders actively pursuing borrowers via foreclosure to take over the properties. It is foreclosing on a Michigan Avenue retail space in Chicago and took over a San Francisco hotel via foreclosure last year. Its special servicing arm, LNR Partners, moved to foreclose on two of Thor Equities Manhattan properties.
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