Margaritaville Resort Times Square Seeks Buffer From Foreclosure in Bankruptcy Filing
By Andrew Coen July 10, 2023 2:56 pm
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The Margaritaville Resort Times Square Hotel has been anything but paradise — and a little sour — since its 2021 debut.
The Jimmy Buffett-branded resort’s developer, Sharif El-Gamal’s Soho Properties, filed for bankruptcy protection Sunday, according to court papers, in a move that prevents a previous foreclosure sale slated for July 10 from moving forward.
Bloomberg first reported the bankruptcy filing.
The UCC foreclosure process was initiated after the property’s mezzanine lender, Arden Group, declared a default, the filing shows. Arden supplied a $57 million mezzanine loan to Soho in June 2021 to refinance the 234-key Midtown Manhattan property at 560 Seventh Avenue that coincided with the hotel’s opening. The default was triggered in March, The Real Deal previously reported, with Newmark (NMRK)’s Dustin Stolly, Jordan Roeschlaub, Adam Etra and Adam Spies tapped to lead the UCC foreclosure sale.
The foreclosure auction was called off at the 11th hour yesterday, sources said.
Soho Properties is seeking to refinance approximately $309 million of total debt connected with the project, according to the bankruptcy filing. The property, which includes 34,271 square feet of retail space, was appraised at between $266 million and $350 million in May 2023, court documents show. The hotel opened amid challenging economic conditions for the hospitality sector that led to “operating shortfalls during its stabilization period,” according to the bankruptcy filing.
“Given the projections for future income, the appraised value of the hotel, and the solid location in Times Square where tourism is reviving, the debtor believes that a refinancing of the hotel can ultimately be achieved within a reasonable period of time,” Sethian Pomerantz, president of Soho Properties, said in the filing. “The hotel’s revenues are improving and are projected to exceed $25 million by the end of 2024 once various vacant retail space is leased.”
Plans for the Margaritaville Resort Times Square Hotel were unveiled in 2018 with El-Gamal saying at the time that the hotel would “undoubtedly be a top destination” as the brand’s first New York location. El-Gamal told Commercial Observer in December 2021 that he believed the development would become the “anchor of Times Square” with its location at the corner of 40th Street and Seventh Avenue.
Evan Laskin, chief investment officer for Margaritaville Resorts & Hotels, said in a statement that the bankruptcy filing “will not impact resort operations” with the property remaining open and fully staffed.
“Margaritaville looks forward to delivering fun and escapism through the resort and restaurant experiences for guests and New Yorkers for a long time,” Laskin said.
Officials at Soho Properties did not immediately return a request for comment. Arden Group declined to comment.
Andrew Coen can be reached at acoen@commercialobserver.com
