MCR Hotels signs term sheet to lend $125M to New Yorker Hotel owner, pressured by Yellowstone

MCR Hotels signed a term sheet with the Unification Church, the owner of the 1,083-room New Yorker Hotel at 481 Eighth Avenue in the Garment District, Manhattan, to lend it $125 million which would pay off a $106 million note recently purchased by Yellowstone Real Estate Investments that has a looming October 1, 2023 maturity date. Filing LINK

The term sheet was disclosed in a court filing the church made, as part of a required process when a religious or nonprofit seeks to sell, lease or mortgage a significant portion of their assets.

The new loan is for 36 months with two twelve-month extension options, according to the term sheet. Term Sheet LINK

Yellowstone Real Estate Investments through the entity YS 481 Eighth Holdings LLC bought the note with an original principal of $110 million from M&T Bank.
The note sale closed on September 1, 2023 and was recorded on September 7, 2023. The Commercial Observer first reported that Yellowstone bought the note.

MCR has been acquiring New York City hotel assets. It signed a ground lease in August with Solil Management, as PincusCo first reported, and bought the Times Square Sheraton in 2022 for $323 million.

The hotel property has 1,300,727 square feet of built space according to a PincusCo analysis of city data.
The property is formally owned by The Holy Spirit Association for the Unification of World Christianity, which is an early name for the Unification Church, also known as Family Federation for World Peace and Unification (FFWPU).

According to the court papers, “The Existing Loan has a current outstanding principal amount of approximately $106 million and matures on October 1, 2023.

After reviewing the competing proposals, a loan from M4 New Yorker LLC [MCR Hotels] in the amount of $125 million was selected and a Term Sheet was executed on August 15, 2023. The Lender was selected based on the proposed loan terms, the recommendation of Cushman & Wakefield and management’s confidence and expectation of an expedited closing due to the Lender’s familiarity with the Hotel based on its affiliation with the current third-party manager of the Hotel, MCR NYH Management LLC. ” According to an email from the lender’s attorney, “There is no cure or grace period under the existing loan documents if Petitioner fails to pay the loan in full on the maturity date of October 1, 2023. Default interest at the rate of 15% will begin to immediately accrue. However, the separate late charge that Lender has the right to impose, which is 5% of the principal amount of the loan, is to be paid upon demand if the maturity payment is not paid within ten days of its due date, ie, by October 10, 2023. 2. We confirm that the interest rate under the new loan, which is the 30 day SOFR (secured overnight financing rate) plus 7.90% is equal to 13.2% calculated as of today’s date. We are prepared to discuss with your office the basis for Petitioner’s determination, in consultation with its retained professionals, that the interest rate is fair and reasonable.”

Direct link to Acris document. link