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Steve Witkoff and Ian Schrager are in danger of losing ownership of the Public Hotel at 215 Chrystie Street after a UCC foreclosure and notice of public auction have come to light.
The joint venture defaulted on an $85 million loan with Värde Partners on the 367-room hotel in the Lower East Side. As a result, Matthew Mannion at Mannion Auctions will sell the hotel at a public auction Sept. 12, The Real Deal reported.
Troubles with the property likely began, as it did for the rest of planet Earth, in March 2020 when the owners temporarily closed the hotel due to the pandemic. The 28-story, 254,700-square-foot hotel opened in June 2017.
The business doesn’t seem to have recovered even as the New York City economy made the slow ascent from the COVID-19 shutdowns.
Its $60 mezzanine loan with Korean lender Shinhan Investment Corporation hit the debt market in September 2020 when the hotel was still closed, Commercial Observer reported at the time. It finally reopened in 2021, but even more debt on the property was changing hands the next year.
Madison Realty Capital and Newbond Holdings acquired the nonperforming debt from lenders Deutsche Bank and Aareal Bank at a face value of $177.3 million, fully accrued to roughly $190 million, CO reported in October 2022.
It’s unclear when Värde picked up the debt.
Witkoff, Schrager and Mannion did not immediately respond to requests for comment.
Värde declined to comment.
Mark Hallum can be reached at mhallum@commercialobserver.com.
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