A court-appointed receiver reported Friday that debts are racking up at real estate developer Mohammad Honarkar’s portfolio of 18 hospitality and event properties in Laguna Beach, according to court records.
Honarkar’s properties, with the exception of Hotel Laguna, have been under the control of court-appointed receivership overseen by San Diego-based receiver Douglas P. Wilson since mid-January, according to a May 21 receiver’s report filed in Orange County Superior Court.
Meanwhile, a Laguna Beach investment firm purchased the $195 million loan backing Honarkar’s properties from the Delaware-based LCC Warehouse LLC, which filed for a foreclosure order early this year.
The new loan owner and plaintiff in the foreclosure case against Honarkar’s companies is now DIG PFSS LBCP Holding Company, LLC, which is controlled by Dornin Investment Group, CEO Chris Dornin confirmed Tuesday. Last year, Dornin obtained city approvals for the Coast Inn and Coast Liquor projects.
Dornin declined to comment for this story.
Under foreclosure law, Honarkar must pay the $195 million note within four weeks of the notice of foreclosure or the properties go up for public auction. Other investors would have the right to bid on the properties at that time.
Honarkar claims the foreclosure process won’t get that far.
“We have been in process of refinancing part of our real estate portfolio with a local bank for the last four months and it is now expecting to close [the second] week of June,” Honarkar wrote in an email Tuesday. “Our previous lender has sold their note to DIG. This is not unusual, many financial institutions do [sell] their notes at [a] discounted price to raise money, especially if they have margin calls. We have received payoff [notice] from DIG and have no problem to meet their requested time.”
Among the issues Wilson has confronted is a six-figure sum owed to the city of Laguna Beach.
The Holiday Inn at 696 S. Coast Hwy., 14 West, The Retreat at 729 Ocean Front, and a collection of short-term rental properties on Sleepy Hollow Lane collectively owe $650,000 in unpaid transient occupancy taxes, penalties, and interest to Laguna Beach. This debt racked up last year as COVID-19 forced health officials to close California hotels to non-essential travel.
Wilson wrote that resolving this debt “remained a top priority” and disclosed ongoing talks with Retiring City Manager John Pietig, Assistant City Manager Shohreh Dupuis, and City Attorney Phil Kohn.
“These discussions include negotiations towards drafting a payment plan to pay down the taxes’ delinquent status as well as an agreement that would govern the terms of the plan and related legal implications,” Wilson said.
The receiver paid first quarter transient occupancy taxes to Laguna Beach prior to the April 30 deadline.
One of the updates that may present a potential challenge for local wedding planners is that the operators of two Laguna Canyon event venues are months behind on their rent due to COVD-19 restrictions. Seven Degrees reportedly owes at least $210,000, equivalent to six months of rent. Seven7Seven owes at least $120,000, equivalent to five months of rent.
“The Receiver has also recently learned the Affiliated Event Tenants have entered into a partnership with Laguna Premiere Events LLC, a third-party, to book and operate events at the venues,” Wilson wrote. “This partnership could potentially complicate the access to scheduling and revenue generation information.”
Separately, Wilson updated the court on 4G Ventures’ effort to obtain a second round of Payroll Protection Program loans for the hospitality properties before he was able to open a new receivership bank account.
In March, 14 West received its PPP Loan totaling $77,784. The receiver subsequently coordinated with 4G Ventures and the funds were promptly transferred to his control. As of May 21, the PPP loan for the Holiday Inn is pending for $263,965 as well as a $27,058 PPP loan for one of Honarkar’s short-term rentals on Sleepy Hollow. The delay of the funding is currently unknown but the already dispersed funds are being monitored per government loan regulations, Wilson said.
Lastly, Wilson reported outstanding accounts payable related to “non-essential invoices” incurred prior to his receivership, which total more than $312,000. These payments continue to be deferred to reserve revenue for property taxes, insurance, ongoing transient occupancy taxes, and other items, Wilson wrote in his report.
The next hearing on this case is scheduled for June 2 in Orange County Superior Court.View Our User Comment Policy