Courts roundup: Yellowstone files $170M hotel pre-foreclosure; refile of $275M Milford hotel pre-foreclosure
541 Lexington Avenue (Credit: Google)
Yellowstone files $170M pre-foreclosure on Maxwell hotel: Yellowstone Real Estate Investments filed to foreclose on a loan with an original principal of $170 million, secured by the 697-unit Maxwell New York City hotel building at 541 Lexington Avenue in Midtown East, Manhattan.
This case and the following one underscore the challenges hotels faced during the pandemic, and continue to face despite an uptick in tourism.
Court filings are the positions of one party and are not necessarily accurate or complete.
Capstone Equities as the identified buyer acquired the property in May 2018 for approximately $190 million. The Yellowstone pre-foreclosure does not name Capstone or its principal Joshua Zamir, the loan document signatory, instead it names a Dune Real Estate Partners fund and Aynsley Capital as guarantors.
Capstone Equities is led by Joshua Zamir and Daniel Ghadamian.
According to the complaint, “Borrower failed to repay the amounts owed under the Loan Agreements in full on their Maturity Date — which occurred more than a year ago on May 9, 2021…there is now due and owing to Lender $182,416,974, comprised of principal, accrued interest, late payments charges, and exit fees as of September 19, 2022… deficiency judgment and related relief against the Borrower and the guarantors of the Loans, Defendants Dune Real Estate Fund IV LP (“Dune”), and Aynsley Capital, L.P. (“Aynsley,” collectively with Dune “Guarantor”), to the extent that the proceeds of the sale at the auction of the Mortgaged Property are insufficient to satisfy the full amount due and owing to Lender. Defendants Dune and Aynsley are being named as defendants by reason of their execution of that certain Guaranty of Recourse Obligations, dated as of May 9, 2018, in connection with the Loans evidenced by the Notes and secured by the Mortgages that are sought to be foreclosed, and because a deficiency judgment will be sought against Guarantor in this action [if sale proceeds don’t cover loan total]…”
Lender files $275M pre-foreclosure on Row NYC hotel (again): A securitized loan entity through its trustee Wells Fargo filed to foreclosure on a loan with an original principal of $275 million, secured by David Werner’s fee interest connected with two condominium units that make up the Row NYC hotel, formerly the Milford. This action is essentially a repeat of a pre-foreclosure filing made by the lender in federal court, in the Southern District, on 1:21-cv-06059-JPC July 15, 2021, that was discontinued, but allowing the case to move to state court.
David Werner and Deutsche Asset & Wealth Management’s purchased the leased fee interest from Rockpoint Group and hotel operator Highgate Hotels for $325 million in 2013, borrowing $275 million. Rockpoint and Highgate continued to own and operate the hotel.
The Real Deal first reported on the pre-foreclosure yesterday.
According to the complaint, “Among other defaults, Borrower has failed to comply with the terms of the Loan Documents by failing to make regularly schedule payments of interest in respect of the Loan from May 5, 2020 through September 5, 2022. On June 17, 2020, the Special Servicer of the Loan, LNR Partners LLC (“Special Servicer”), acting on behalf of Lender, sent Borrower a letter (the “Default Notice”), wherein Special Servicer notified Borrower of Borrower’s “failure to make regularly scheduled payments of interest in respect of the Loan” on May 5, 2020 (the “May Interest Payment”) and on June 5, 2020… On October 23, 2020, Special Servicer, acting on behalf of Lender, sent Borrower a notice of default and notice of acceleration.”