Times Square Edition hotel steps closer to foreclosure sale
A foreclosure decision usually allows a lender to immediately proceed with the sale of a property in order to recoup their investment. New York State Supreme Court Judge Joel M. Cohen has scheduled a status conference between the parties on March 23 to decide how to proceed, according to court documents.
Representatives for Natixis and Marriott declined to comment. Maefield did not immediately respond to the request for comment.
A foreclosure sale would complete a surprising reversal for a property seen as a branded development in Times Square. A 2018 appraisal valued the property at $ 2.4 billion, and a party in 2019 to celebrate the rare opening of a luxury hotel in the neighborhood drew a list of celebrities spanning generations, from Kendall Jenner to Diana Ross.
But Maefield struggled to fill the retail space, and the hotel failed to generate positive cash flow, according to the court ruling, leading lenders to file for seized in December 2019. In the months that followed, the Covid-19 pandemic devastated the global hospitality industry, grounding travelers and closing hotels.
In May, Marriott threatened to remove the Edition brand from the hotel due to a cash flow shortage, warning employees and union officials that the hotel could shut down permanently in the coming months. Marriott eventually struck a deal with Maefield’s lenders, though the property remains closed.
Property is hardly alone in its struggles. Hotels in New York City recorded occupancy rates of 38% in January, up from 72% in 2020, according to accommodation data provider STR. Nearly 27% of hotels in the New York metropolitan area funded by commercial mortgage-backed securities are at least 90 days past due, according to data compiled by Bloomberg.
Still, many lenders have been reluctant to take ownership of loss-making hotels, preferring to extend loans and hope borrowers will make up for missed payments during a possible travel rebound.
Hotel owners in the United States have been forced into bankruptcy in recent months amid ongoing disputes and attempted foreclosures by lenders. The owner of the Williamsburg hotel in Brooklyn filed for Chapter 11 last month and has been facing foreclosure by his lender since June 2019. A hotel development in Coachella, Calif. Recently filed for bankruptcy after its lenders attempted to seize, amid allegations of fraud and mismanagement.