Judge: Hotel foreclosure sale is off the “Mark”

first_imgShare via Shortlink TagsCoronavirusHotelsReal Estate Lawsuits Alexico claims the hotel, at 25 East 77th Street, was doing just fine before Covid. Its cheapest room is $745 and Meghan Markle, the Duchess of Sussex, held her baby shower in its $75,000-a-night, 10,000-square-foot penthouse — the most expensive room in the U.S. — in February 2019.But the Mark closed in March and missed mortgage payments in April and May, prompting Ohana and senior lender Wells Fargo to issue default notices. Then a friend called Alexico owner Izak Senbahar to tell him his hotel was to be auctioned off June 7, according to a court transcript.Alexico sued the day before the scheduled sale and state Supreme Court Justice Andrea Masley postponed the auction for at least 30 days, agreeing that it was being rushed in the midst of a pandemic. Now she has blocked Ohana from holding a foreclosure auction until July 24.Alexico might be trying to buy time to work out a deal to keep the hotel, after claiming its lenders reneged on a verbally negotiated mortgage forbearance. It reopened the Mark on June 15.Mezzanine foreclosures are not subject to New York state’s foreclosure ban, but lenders are still required to conduct auctions in a “commercially reasonable” manner, the judge ruled.“Expanding the time to market the collateral and make a market for this unique hotel property is an elegant solution,” Masley wrote in her decision. Alexico had requested that the auction be stayed for even longer, until mid-August.In court filings, Alexico called Ohana’s attempted sale of the property “rigged” and a “predatory attempt to capitalize on the Covid-19 pandemic.” Ohana’s original notice of sale restricted interested buyers from contacting Alexico and forbade the borrower itself from bidding.While 115 potential bidders virtually toured the property, just two of them met the financial requirements to bid at the auction.The court order directs Ohana to contact at least 700 potential bidders for the auction and to publish a notice of the sale in the Wall Street Journal and a trade publication.In a similar case, a judge in May gave the go-ahead to a mezzanine foreclosure on a hotel project in Midtown. Borrower Hidrock Properties had objected that the sale was “rigged” and taking advantage of coronavirus. The project had faced construction delays and financial difficulties since before the pandemic, and the judge did not find the foreclosure sale to be unreasonable. [Bisnow] — Kevin Sun Ohana Real Estate Investors CEO Christopher Smith (left) and Alexico Group’s Izak Senbahar with the Mark Hotel at 25 East 77th Street (Getty, LinkedIn, Google Maps)With lenders like this, who needs enemies?That sums up the case brought by the owner of the ritzy Mark Hotel against Ohana Real Estate Investors, which scheduled a foreclosure sale of the Upper East Side establishment after two payments were missed on its $35 million mezzanine loan.So far, the courts have sided with the hotel owner, Alexico Group, a Manhattan-based luxury condominium and hotel developer, over California-based Ohana, according to reports by Bisnow.Read moreAlexico lands $230M refi for Mark HotelRFR Holding acquires $60M loan to Mark HotelNation’s most expensive hotel room is at the Mark Share on FacebookShare on TwitterShare on LinkedinShare via Email Share via Shortlinklast_img read more