Margaritaville Times Square Hotel Owner Files Second Bankruptcy Motion
A July 9 bankruptcy filing from Soho Properties protected it from a UCC foreclosure by lender Arden Group
By Brian Pascus August 14, 2023 12:58 pm
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Sharif El-Gamal’s Soho Properties is taking further steps to protect its interests in the Margaritaville Resort Times Square Hotel.
The Manhattan-based developer filed a second bankruptcy petition on Aug. 11 to place its fee owner entity — 560 Seventh Avenue Owner Primary — under Chapter 11 protection. Soho Properties had filed for separate bankruptcy protections on July 9 to stop a foreclosure sale initiated by the property’s lender, Arden Group.
PincusCo first reported the news of the second bankruptcy filing connected to the Times Square property.
In the new bankruptcy filing, Soho Properties executive Sethian Pomerantz argued that his firm is negotiating with Cirrus Real Estate Partners to borrow $170 million for one year (plus a three-month extension) to “refinance the senior mortgage in its entirely and provide immediate liquidity for the hotel’s other debts.”
“Although the hotel is on the upswing, it still faces a multitude of defaults with its lenders, franchise holders and vendors, creating the need for a global restructuring among all stakeholders, which can best be achieved in Chapter 11,” argued Pomerantz in the Aug. 11 court filing.
An earlier court filing showed that Soho Properties is seeking to refinance approximately $309 million of secured and mezzanine debt connected with the project, CO previously reported.
The troubles at Margaritaville Resort Times Square -– a 34,271-square-foot, 234-key hotel located at 560 Seventh Avenue — began in March, when a missed $57 million loan payment triggered a default of Soho Properties interest in the hotel. The missed payment initiated a UCC foreclosure sale of the property. While the earlier bankruptcy protection action instituted by Soho Properties occurred on July 9, Newmark (NMRK)’s Dustin Stolly, Jordan Roeschlaub, Adam Etra and Adam Spies were tapped to lead the sale that had been scheduled for July 10.
Now Pomerantz and El-Gamal aim to buy even more time in this most recent bankruptcy protection maneuver. The firm’s latest court filing insisted that any missed payments had to do with larger economic forces and that the Margaritaville brand remains popular with both consumers and guests.
“The hotel’s financial issues have nothing to do with Margaritaville and were caused by adverse market conditions over the last two years,” Pomerantz wrote in the Aug. 11 filing. “Nevertheless the Margaritaville brand has performed well financially, achieved outstanding customer satisfaction ratings and has been supportive of the hotel through a difficult financial environment.”
Pomerantz also argued in the Aug. 11 filing that the financials of the hotel are strong, and that occupancy levels have been high throughout this year.
“Based on current data, the hotel’s occupancy rates are on the rise,” Pomerantz wrote in the filing. “Occupancy levels have been at 95 percent or more for the months of April, May and June. Preliminary reports relating to July reflect daily occupancy at 97 percent with total revenues of $2,659,394.”
Pomerantz added that the hotel has an appraised value between $273 million and $302 million, with a potential stabilized value of between $307 million to $339 million as of April 1, 2025.
The hotel was appraised at between $266 million and $350 million in May 2023, court documents show.
Soho Properties did not immediately return a request for comment. Arden Group declined to comment.
Brian Pascus can be reached at bpascus@commercialobserver.com.
