DekaBank Forecloses on Shuttered NY Marriott East Side Hotel
By Nicholas Rizzi February 10, 2021 1:40 pm
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German financial institution DekaBank has moved to foreclose on the former New York Marriott East Side hotel at 525 Lexington Avenue in Midtown East.
DekaBank filed a complaint in Manhattan Supreme Court on Tuesday to take control of the 35-story property after the owner, listed as Lexington Avenue Hotel LP, failed to pay the $53 million mortgage when it came due on June 30, court records show.
The property is owned by a joint venture of Deka Immobilien Investment GmbH, a subsidiary of DekaBank which owns an 85 percent stake, and Ashkenazy Acquisition Corporation. A spokesperson for Ashkenazy declined to comment.
“DekaBank is looking after its interests through the foreclosure proceedings,” a spokesperson for DekaBank said in a statement. “In this context, the outstanding claim amount is to be achieved. The foreclosure proceedings against the special purpose vehicle are necessary to realize the outstanding claim.”
Deka Immobilien and Ashkenazy acquired the 655-room hotel between East 48th and East 49th streets for $270 million in 2015. The pair tried to unsuccessfully offload the property starting in 2016 as the hotel market softened. The Marriott hotel permanently shuttered in March as the coronavirus pandemic decimated the hospitality industry.
DekaBank issued a $53 million mortgage to the venture tied to the hotel in 2015, but claims in court documents that it brought the foreclosure proceedings after the venture failed to pay back the full loan in the summer and was hit with a mechanic’s lien on the property it failed to discharge.
The foreclosure isn’t the first legal spat tied to the hotel in recent years. In 2019, Deka sued Ashkenazy after it claimed Ashkenazy pulled out of a $174 million deal to take full control of the hotel, as CO previously reported.
And, in October, Lexington Avenue Hotel LP sued Marriott after it claimed the hotelier misappropriated $12 million from the property’s maintenance funds to shore up its balance sheets, Crain’s New York Business reported. The suit was settled within a week.
