Sherif El-Gamal’s Soho Properties filed a second bankruptcy petition at the Margaritaville Resort Times Square at 560 Seventh Avenue in the Garment District in Manhattan, this time placing the fee owner entity under Chapter 11 protection. Soho Properties executive Sethian Pomerantz made the petition through the entity 560 Seventh Avenue Owner Primary LLC.
Case link 23-11289
The hotel has 234 guest rooms, and includes 34,271 square feet of retail space.
According to the filing, Soho Properties is in negotiations to borrow $170 million from Cirrus Real Estate Partners to pay off the senior debt, a loan with an original principal of $167 million given in 2021 by One William Street Capital Management. The filing also says the developer has struck a deal with the union and that occupancy hovers around 95 percent. Nonetheless, it is still facing millions in unpaid bills and litigation with Dream Hotel Group (655926/2021) and Garment Center Congregation (654427/2022).
In the first bankruptcy petition, filed July 9, 2023, the developer placed the mezzanine borrower into bankruptcy to block a UCC auction scheduled for July 10, 2023, for the $57 million mezzanine loans. The property at the time had $309 million in secured and mezzanine debt.
In addition to the legal troubles at the hotel, the firm also did not acquire an assemblage in Jamaica, Queens, where it said it was in contract. Soho Properties told PincusCo in May 2022 that is was in contract to buy a development site to develop senior housing in Jamaica, Queens, including 153-02 to 153-12 Hillside Avenue, but the charter school Success Academy ended up buying the parcel in March 2023 for $30 million.
In the latest action in the first bankruptcy case, Soho Properties was fending off an effort by the mezzanine lenders who are seeking to lift the automatic stay on the UCC foreclosure, citing a “bad faith” bankruptcy filing.
According to the new bankruptcy petition, “In contemplation of the bankruptcy filing by the Hotel, terms and conditions are being negotiated for a DIP loan with Cirrus REP Funding LLC for a 12-month initial term with one (1) 3-month extension in the total sum of $170 million which the debtor anticipates will be used to refinance the senior mortgage in its entirety and provide immediate liquidity for the Hotel’s other debts… The Hotel itself is managed on a day-to-day basis by a third-party management company formerly affiliated with Dream Hotel Group… The Hotel itself contains 234 guest rooms, plus 34,271 square feet of retail space. Most of the retail space, save for approximately 5,000 square feet on the corner of 40th Street, is eased to an affiliate of International Meal Company, Inc. known as IMCMV Times Square LLC “IMC”). IMC operates a restaurant at the Hotel, paying the Debtor approximately $300,000 per month… The Hotel has just recently resolved a certification dispute with the Hotel and Gaming Trades Council (the “Hotel Union”) which became the designated bargaining representative at the Hotel. The Debtor signed a Memorandum of Understanding (“MOU”), a copy of which is annexed hereto as Exhibit “A”. Among other things, the MOU eliminated the Hotel from being assessed substantial fines and provides labor peace…
“Occupancy levels have been at 95% or more for the months of April, May and June. Preliminary reports relating to July reflect daily occupancy at 97% with total revenues of $2,659,394.the Hotel has an appraised value in the range of between $273 million and $302 million, with a potential stabilized value of between $307 million to $339 million as of April 1, 2025”
The filing initially misspells the given name of Soho Properties executive Sethian Pomerantz who filed the petition as Stehian Pomerantz.
Two outside directors from the company Corporation Service Company (CSC) approved the restructuring petition, James L. Grier and Michelle Dryer.