Mack Real Estate snapped up seven distressed hotels in Manhattan, with the sellers taking a big loss at a UCC foreclosure auction.
The developer moved to foreclose on the properties earlier this year after owners Hersha Hospitality Trust and Cindat Capital Management defaulted on an $85M loan provided by Mack’s alternative lending platform, Mack Real Estate Credit Strategies, The Real Deal reports.
Mack paid transfer taxes on $315.8M for the hotels, per the publication, a 40% reduction on the $816.3M the properties were valued at back in 2016, yet another example of the dire state of the hospitality industry in New York City.
The seven hotels are all under the Holiday Inn, Hampton Inn and Candlewood Suites name and all located in Manhattan. The portfolio went up for auction back in January, according to TRD.
With tourism and travel essentially shut down for the last year, scores of hotels are closed and some will never reopen. The strain is already being felt in the market in multiple ways. The Tillary Hotel in Downtown Brooklyn, owned by Isaac Hager’s Cornell Realty Management and partners, filed a Chapter 11 petition in New York bankruptcy court in December.
The Hilton Times Square, the W Hotel Downtown, The Roosevelt and Midtown’s the Maxwell and Omni Berkshire hotels have all announced they will close permanently. Last summer, Ashford Hospitality Trust walked away from the Embassy Suites by Hilton in Midtown that it had owned for less than two years in order to meet demands from lenders.
Mack, for its part, is making use of opportunities many had predicted would come about as a result of the coronavirus pandemic. Alternative lenders were already considering a year ago if they would step in and take over properties that were in distress, as Bisnow reported last April.
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