Heitman sues to block termination of $45M ground lease at Renwick Hotel
An affiliate of Heitman Capital Management sued the fee owners of the Renwick Hotel at 120 East 40th Street in Murray Hill, to block them from terminating the $44.8 million ground lease with the ground tenant, Meadow Partners.
The Chicago-based Heitman as lender filed the suit to protect the ground lease which tenant Meadow Partners signed with the landlord group in 2013, and which is the security for a $46.3 million loan which Heitman gave to Meadow and which has been declared in default.
Even as Heitman has declared that loan in default, the ground landlords have claimed the ground lease is also in arrears.
Hotel properties have lost significant value over the past several years, and several properties have seen foreclosure suits, note sales or owners handing back the keys, for example at the FiDi Moxy.
The Renwick landlord group sent notice it will terminate the ground lease on May 24. As PincusCo first reported, Heitman sued in December 2020 to foreclose on its loan to Meadow. If it forecloses on that loan, it will step into the tenant position in the ground lease.
According to the complaint, in the fall of 2020, Heitman sought to sell the debt but could not. Highgate Hotels, the hotel manager, terminated its contract in December 2020.
According to the complaint: “In its March 12, 2021 Notice of Termination, [the landlords] assert that because of [Meadow Partners’] alleged failure to cure certain past monetary defaults — [Meadow Partners’]s failure to pay the April 2020 ground rent and certain other operating expenses of the Renwick Hotel — the Ground Lease will be terminated on March 22, 2021 (since extended to May 24, 2021 by stipulation of the parties).”
Meadow Partners in 2013 signed the 99-year ground lease valued at $44.8 million with the landlord parties, including William Rand, Ruth Alpert, Andre Jagendorf and Richard Read. The complaint says the landlord parties seek to terminate the ground lease for reasons including that lender is not an “institutional lender.” Heitman disputes that characterization, stating that, “Heitman Capital Management LLC is part of Heitman LLC, a global real estate management firm with current assets under management of approximate $43,800,000,0000.” LINK