NoMad Hotel to Sell in UCC Foreclosure Auction
Creditors of the NoMad Hotel have hired JLL (JLL) to market the property in a Uniform Commercial Code, or UCC, foreclosure sale, according to sources familiar with the auction.
An auction initiated by the mezzanine lender on the hotel, Colony Financial, will take place on June 6 and is set to sell off the full ownership interest in the property to the highest bidder.
UCC foreclosures, which have become more frequent lately, allow borrowers to enforce their rights in floundering debt deals in a speedier timeline than judicial foreclosures.
The NoMad Hotel, at 1170 Broadway at the corner of West 28th Street, was conceived by hotelier Andrew Zobler and his Sydell Group along with Make It Nice, a partnership between entrepreneur William Guidara and chef Daniel Humm. The pair also run a NoMad Hotel in Los Angeles.
The auction announcement comes as a surprise as there’d been no outward sign of distress at the hotel. The property made a splash when it opened in 2012 because it represented the second high-concept lodging to open in the neighborhood immediately north of Madison Square Park, joining an earlier comer, The Ace Hotel, as pioneering operations in what had been a relatively forsaken sliver of Midtown South.
All signs had pointed to a robust operation. A reviewer writing in The New York Times said of the New York hotel: “The NoMad stands out for its bohemian glamour, from the laser-sharp but friendly service to the opulent yet intimate interior.” A buzzy restaurant on the building’s ground floor—called The NoMad—hosted Barack Obama, then the president, shortly after it opened.
Financiers showed no apparent concern. In November 2015, Colony provided a $35 million mezzanine loan to the owners, Sydell Group and Make It Nice, sources said, in conjunction with a $105 million package from Bank of America (BAC) to refinance previous construction debt from Deutsche Bank (DB), according to city records. Bank of America also provided a $25 million gap mortgage in the deal.
Representatives for the hotel’s owners, for JLL and for Colony did not immediately respond to inquiries about the reason for the foreclosure. But the NoMad is not the only prominent hotel in the area north of Madison Square Park to have suffered significant setbacks in the last year.
Last summer, the Flatiron Hotel, at 9 West 26th Street near Broadway, filed for bankruptcy after apparent mismanagement led to legal and financial woes. And in February, one of the restaurants at the Ace Hotel, John Dory Oyster Bar, closed after an owner of the company who ran it, Ken Friedman, was accused of sexual harassment. The Ace Hotel’s operating company also sued Friedman’s restaurant company, which he co-headed with chef April Bloomfield, for improper financial reporting.
Only last year, Toby Moskovits narrowly escaped a UCC foreclosure on her multifamily property at 564 St. John’s place in Crown Heights, Brooklyn after the remedy was pursued by mezzanine lender Benefit Street Partners. Moskovits refinanced the debt on the property with a loan from Arbor Commercial Mortgage, as first reported by Commercial Observer.
Colony has seen trouble crop up on another major hotel for which it was the lender as well. In August 2018, it took back the keys to a 500-room Hilton Hotel against which it had lent $75 million in Dallas, according to the Dallas Morning News.
With additional reporting by Cathy Cunningham.