Alex Sapir Boots Highgate from NoMo Soho Hotel

While Alex Sapir still appears to be trying to sell the NoMo Soho hotel, he’s moving to improve finances in the meanwhile.

This week, the Sapir Corporation agreed to replace the management company of the property at 9 Crosby Street, according to a report filed with the Tel Aviv Stock Exchange. As of March 15, Crescent Hotel Management will take over operations of the hotel, kicking Highgate Hotels to the curb.

Highgate has been managing the property since September 2018. Crescent currently manages roughly 100 hotels in North America, including half a dozen properties in New York.

Sapir and Crescent could not be reached for comment. Highgate did not immediately respond to a request for comment from The Real Deal.

Sapir said the hotel’s service level and food and beverage operations would improve with the change, according to the filing. Perhaps more importantly, however, is that Sapir will be cutting the management fees it pays in half, at least initially. Crescent will charge 1.5 percent in the first year, against the 3 percent Highgate required.

According to the filing, the management fee will jump to 2 percent of revenue in the second year of the contract and remain at that level. Crescent will also be entitled to an annual success fee if actual operating profit exceeds the budgeted operating profit. The fee will be at a rate of 20 percent of the excess, though the combined fees will not exceed 5 percent of a year’s annual revenue.

The management agreement is for five years, though there are two five-year extension periods that will automatically kick in unless either party decides to terminate the deal.

Last year, Sapir Corp put the 264-key hotel on the market to pay off debt held by Israeli bondholders. In June, Sapir requested to push back an outstanding $34 million debt until 2025, in exchange for a $6 million partial payoff and an increased interest rate.

Sapir bought the hotel for $208 million in 2015. The hotel’s value has since dropped to $179 million.