Lender Forecloses On Margaritaville Times Square
Sharif El-Gamal's Soho Properties might have developed a real beauty of a hotel at the Margaritaville Times Square Resort, but now, as the song goes, it's got nothin' to show but this brand-new tattoo.
Soho Properties lost its stake in the 234-room hotel at 560 Seventh Ave. at a foreclosure auction after battling to maintain a grasp on the property since defaulting on debt payments earlier this year, The Real Deal reports.
Arden Group, which lent El-Gamal's firm mezzanine debt on the hotel, used its loan to submit a credit bid to take over his equity stake, per TRD, and there were no other bidders.
El-Gamal’s firm fought hard to keep control of the property that he, MHP Real Estate Services, and Chip and Andrew Weiss developed for $400M. It has a rooftop swimming pool, a two-story rooftop bar and a 16K SF Margaritaville restaurant.
In July, the LLC that owned the equity in the 36-story hotel, 560 Seventh Avenue Owner Secondary, filed for Chapter 11 bankruptcy protection. The bankruptcy filing precluded the pending foreclosure auction, giving the owners a chance to try to restructure the debt on the property and retain control.
A month later, Soho Properties placed its fee owner entity, 560 Seventh Avenue Owner Primary, under Chapter 11 protection in another attempt to stave off the sale. There is more than $371M of debt on the property, which the owners were working to refinance.
El-Gamal's attorneys also tried to hold up the foreclosure by claiming that Arden didn’t allow other bidders a fair chance to look at the property, per TRD, but a judge ruled the foreclosure could move forward. The hotel was appraised for between $226M and $350M this year.
Chip and Andrew Weiss’ attorney, Larry Hollander, told TRD that the foreclosure is far from the final chapter in the saga of the resort's ownership.
“This is the first step in a possibly long haul and my clients are taking it under advisement,” Hollander said.
Arden declined to comment to the publication. In an email to Bisnow, counsel for Sharif El-Gamal wrote that the sale hadn't closed more than two weeks later and the way the auction was conducted was “commercially unreasonable."
CORRECTION, NOV. 6, 10:15 A.M. ET: Lender Arden foreclosed on the Margaritaville Times Square, but has not yet taken control of the building, as a previous version of this story indicated. This story has also been updated to include comments from SoHo Properties' counsel.
