The cracks are starting to show in New York City’s hotel market.
Richard Born and Ira Drukier’s BD Hotels — the largest boutique hotel company in the city — has stopped making payments on their mortgage on the 600-room Watson Hotel on Manhattan’s West Side, sources told The Real Deal.
Now, HSBC, which provided BD Hotels with a $42.5 million loan in 2011 to finance its leasehold on the hotel at 440 West 57th Street, is looking to sell the non-performing loan.
Representatives for BD Hotels and HSBC could not be immediately reached for comment. The loan matures April 1 of next year and has an unpaid principal balance of $33.9 million, according to marketing materials.
Brokers handling the loan sale are pitching it as an opportunity to easily reposition a hotel that is free from a managing or branding agreement. Alternatively, it could be torn down and redeveloped for other purposes.
“The property’s zoning allows an investor to reimagine the prime 57th Street frontage into multifamily or office space, neighboring some of the most coveted developments in the city,” a teaser for the loan explained.
Eastdil Secured is marketing the loan. The brokers could not be reached for comment.
Hotels across the city are feeling the effects of the Covid-19 induced shutdown, which ground tourism to a halt and forced many to shutter their doors and layoff staff.
While some lenders have been willing to offer forbearance to mortgage borrowers who are struggling to make payments, others are moving on from the troubled loans.
The tony Mark Hotel at 25 East 77th Street recently went into default, and the special servicer on the hotel’s $115 million commercial-mortgage backed securities loan scheduled a UCC foreclosure auction.
Contact Rich Bockmann at rb@therealdeal.com or 908-415-5229