UPDATED Oct. 26, 2021, 2:12 p.m.: Just when you think things cannot get any crazier at Brooklyn’s swankiest hotel, they do.
Brooklyn developer Zelig Weiss has made an all-cash offer to buy the William Vale hotel as he battles a lawsuit alleging he diverted money from it.
Weiss submitted proposals Oct. 22 to buy equity interests in the hotel along with the debt held by Israeli bondholders for $156 million. On Oct. 25, Weiss upped his offer to $163 million.
Ohana Real Estate Investors, based in Redwood City, California, has agreed to finance one of Weiss’s proposals, according to public documents filed on Tel Aviv Stock Exchange.
But Israeli bondholders, who have to approve the deal, said, essentially, not so fast.
The bondholders will not vote on Weiss’s proposal at this time, according to a public filing on the Tel Aviv exchange. Instead, they voted on Tuesday to proceed with a proposal by Monarch Alternative Capital and Richard Wagman’s Madison Capital to purchase their debt. Over 80 percent of independent bondholders voted in favor of Madison and Monarch’s proposal, filings show. The deal has not closed, however, and Weiss could pursue litigation.
Weiss’s bid is the latest twist in a bizarre ownership dispute over the noteworthy hotel property, which boasts the longest outdoor pool in New York City. The 183-key hotel and office complex in Williamsburg was developed by Yoel Goldman’s All Year Holdings in 2016.
Since then, Goldman’s portfolio has been engulfed by defaults, foreclosure threats and claims of fraud. All Year Holdings’ responsibilities have now largely been left to an appointed restructuring officer.
Meanwhile, Weiss, Goldman and All Year are duking it out in state court, with All Year alleging that Weiss, who runs the hotel, has refused to pay rent while the hotel was operating. The lawsuit further alleges that Weiss-controlled tenants scored more than $7 million in forgivable Paycheck Protection Program loans but never paid its landlord.
The roles of Weiss, Goldman and All Year at the William Vale were complicated even before the disputes and ownership scuffle erupted.
All Year Holdings and Weiss had a 50-50 stake in a company that owns the property, according to Israeli stock exchange filings. That company, Wythe Berry Fee Owner, leases out the property to an entity equally controlled by Weiss and Goldman. Weiss, however, is the one managing and running the property, according to a New York Supreme Court lawsuit.
Now, Weiss is seeking to acquire All Year’s remaining equity in the William Vale from the bondholders, while also acquiring the debt. This could give Weiss control of the property. (It is unclear if bondholders can actually approve the sale of the equity interests.)
“I am closely familiar with the WV Complex and have the financial resources and willingness to move quickly towards closing the proposed transaction,” Weiss said in the offering proposals.
On Oct. 22, Weiss gave bondholders two options. The first is to be paid $156 million now, which is 87 cents on the dollar of the outstanding principal. The second is for 579 million Israeli shekels (about $180 million) in two separate payments: an initial $25 million and the balance on Jan. 31, 2024. Weiss said the second proposal would equal 100 percent of bondholders’ outstanding principal.
Weiss’ increase of the first offer to $163 million brings it to 100 percent of the outstanding principal.
Bondholders were also presented with a proposal by a joint venture of Monarch and Madison Capital to acquire their debt.
It consisted of either a cash payment equal to 82 percent of the bondholders’ principal or two cash payments totaling 86 percent of it. The bondholders voted for the second option. Because the loans are in default, upon acquiring them, the joint venture could proceed with a foreclosure.
Israeli bondholders have another option on the table. They could bet that All Year triumphs in its lawsuit against Weiss and uses the money it wins to repay them. The lawsuit seeks to terminate Weiss from the lease and collect over $157 million for breach of contract.
This is not the first time that Weiss and Goldman have been at odds over their Brooklyn holdings. In April, Goldman sued Weiss and other partners over a 2017 settlement involving a redistribution of ownership in three Williamsburg parcels.
All Year Holdings was among the first New York development firms to raise money in the Israeli bond market. The firm recently reached a deal to sell one of the jewels of its portfolio, The Denizen apartment complex in Bushwick for $506 million.
An attorney representing All Year Holdings declined to comment. Attorneys representing Weiss also declined to comment. Ohana Real Estate Investors did not return a request for comment. Monarch and Madison Capital declined to comment.
This story was updated with the results of bondholders’ votes.