It all comes down to a very large, rectangular piece of paper.
A dispute over a billboard that looms over the former Standard Hollywood on Sunset Boulevard is holding up hoteliers Ian Schrager and Ed Scheetz’ purchase of the 139-key hotel, The Real Deal has learned.
In March, Schrager — known for opening Studio 54 — teamed up with the former CEO of Morgans Hotel Group to buy the shuttered hotel from a limited liability company called Rittersbacher Sunset. The Standard shut its hotel after Rittersbacher had raised rents, making it infeasible to operate.
Schrager and Scheetz agreed to buy the property for $120 million, or about $863,000 per key, according to court records. About $30 million of that stemmed from signage rights attached to the billboard above the hotel, located at 8300 Sunset Boulevard, according to a source familiar with the deal.
But the deal has stalled since then, according to court records.
In June, Rittersbacher Sunset filed a lawsuit against Osik Media, an advertising company that is using the billboard, alleging it won’t give up the sublease.
As a result, Osik has “prevented Rittersbacher from closing a pending sale of the property to a third party,” Rittersbacher, which is linked to Randy Garitty of Oregon, said in its complaint.
None of the involved parties responded to requests for comment.
Osik subleased the billboard rights in 2001 from an entity linked to Ferrado Group — a former leaseholder on the property, according to a response filed by Osik Media with L.A. Superior Court. The sublease is valid through 2027, Osik added.
Shortly after Rittersbacher Sunset put the property up for sale last year, Rittersbacher notified Osik that it would terminate the sublease and asked the billboard operator to give up the property. Osik had initially agreed and said it would pay $31,000 in monthly rent for the billboard until it vacated, according to a court declaration written by Garitty.
“Osik refused and still refuses to” give up the billboard, Osik said in its filing, adding the sublease was never terminated and Rittersbacher is not entitled to do so.
As of June, Rittersbacher had racked up $5 million in fees related to the binding sale agreement, the entity said — a sum that is “increasing daily,” it added.
It’s not the only complication Schrager and Scheetz have faced with the property.
In April, the city of West Hollywood voted to designate the the 1962-built hotel as a landmark, meaning any new owner would have to jump through more regulatory hoops to demolish or even substantially renovate the property.
The property will not remain a Standard hotel under Schrager and Scheetz’s ownership. Both have their own hotel brands — Schrager with the Public and Edition, while Scheetz created the Chelsea Hotels. In 2020, Schrager scored branding of the 190-key West Hollywood Edition at 9040 West Sunset Boulevard.
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