Queensgate Investments Defaults on Downtown L.A. Hotel

The European owner of a Downtown Los Angeles boutique hotel and hostel has defaulted on the property’s debt, just as L.A.’s controversial new hotel wage ordinance takes effect. 

London-based private equity firm Queensgate Investments defaulted on $70.8 million in outstanding debt tied to the 226-key Freehand Los Angeles hotel at 416 West Eighth Street, according to PropertyShark records. Atlanta-based lender Trimont provided the loan in 2021, with a maturity date this past May. 

Queensgate, which owns international hostel brand Generator, acquired the Freehand Hotel brand in 2019 as part of a $400 million deal with Sydell Group and Ron Burkle’s Yucaipa. The Freehand Los Angeles Hotel features 167 private rooms and 59 hostel-style shared rooms, along with a rooftop bar. The Real Deal first reported the news.

Representatives for Queensgate and for Trimont did not immediately respond to requests for comment. 

Another L.A. hotel tied to Burkle has faced distress, too. Corten Real Estate Partners in July paid $68 million at foreclosure auction for The Line LA, a 384-key hotel developed by a Yucaipa affiliate in 2014. Burkle’s company had landed a $100 million loan from Corten in 2022, Commercial Observer reported at the time, though Yucaipa defaulted on that debt earlier this year. 

Meanwhile, a citywide ordinance that will raise the minimum wage for hotel workers through 2028 took effect in early September. A petition against the ordinance, filed by an association of hotel owners and advocates over the summer, failed to gather enough signatures to force a referendum vote. Hilton Universal City developer Sun Hill Properties killed an 18-story expansion to the property in May specifically because of the ordinance, the firm’s CEO told CO at the time. 

Nick Trombola can be reached at ntrombola@commercialobserver.com.