The Hyatt Regency Lake Washington at Southport in Renton was sold for about $103 million following a lawsuit against the owners and the hotel’s bankruptcy filing.
According to an affidavit posted by King County and a press release from Ohana Real Estate Investors, on Dec. 13, SECO Development Inc, which owns the Hyatt Regency, 1053 Lake Washington Blvd. N., sold the Renton location to Ohana Real Estate Investors for $103 million.
Chapter 11 Bankruptcy was filed by SECO — the developer of Southport — by its CEO Michael Christ on Sept. 20, and was subsequently granted by the U.S. Bankruptcy Court Eastern District of Washington.
The bankruptcy and sale of the 347-room hotel on Lake Washington come after a lawsuit filed by 49 Chinese citizens against Christ and seven businesses he owns, requesting damages of $26 million, or $550,000 for each plaintiff.
According to the lawsuit, each plaintiff signed a subscription agreement and limited partnership agreement — and paid a subscription price of $500,000 and an administration fee of $50,000 — to become limited partners in connection with their EB-5 immigration visa application.
The EB-5 immigration program was created by the U.S. Congress in 1990 to stimulate the economy through job creation and capital investment by foreign investors. The program allows qualified foreign investors to obtain immigration visas and apply for green cards if they invest in certain commercial enterprises that meet certain qualifications.
The lawsuit alleges that the plaintiffs had collectively invested $26 million out of the $99.5 million capital that foreign investors put into the development the hotel. The lawsuit said the investors were promised repayment plus interest.
The lawsuit said that issues began when the hotel was built in 2017, though SECO took a $130 million senior loan, which made the EB-5 loan subordinate — meaning in the case of default, it is paid after the senior loan — to the $130 million loan.
The lawsuit said the plaintiffs were aware of this senior loan in 2017, but unaware of the amount until January 2023. The lawsuit said that the plaintiffs knew, according to the deed of trust, that the EB-5 loan could be subordinated to a senior loan, but that the senior loan could not surpass $19 million.
However, when the hotel was put up for sale, the lawsuit alleges that Christ told the investors that the sales proceeds would not be sufficient to repay both the $130 million senior loan that SECO took out in 2017 and the $99.5 million EB-5 loan plus interest. The lawsuit said the plaintiffs were told they would only be given $11 million.
The lawsuit states that Christ took multiple senior loans to continue financing the hotel, totaling over $250 million when a hotel the size of the one built should cost between $43 million and $105 million.
The claims against the defendants are fraud, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, breach of books and records obligations, securities fraud, civil conspiracy, and violation of RCW 19.86.020, which includes unfair competition, practices, declared unlawful.
The lawsuit is set to go to trial on March 10, 2025.
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