Solil Management is seeking to terminate Aby Rosen’s RFR Holding’s long-term lease on the Gramercy Park Hotel and collect $79.5 million, according to a lawsuit filed Friday in New York Supreme Court. In December, RFR faced eviction at the hotel when it fell nearly $1 million behind on ground lease payments, The Real Deal reported.
Backdrop: RFR signed a 72-year ground lease in 2006, and pays Solil more than $5 million a year to lease the land. The developer attempted to renegotiate the lease with Solil in the summer of 2019, as the city’s hotel market dropped so precipitously that it rendered the leasehold “worthless,” according to the complaint. At that point, Solil claims RFR also began removing valuables from the hotel. Those included furniture, along with Rosen’s art collection it advertised on the website. RFR also allegedly ceased making its rent and tax payments, TRD noted.
Dig Deeer: Solil says that “Rosen has chosen not to operate the Gramercy Park Hotel and has kept it closed to paying guests” amid the pandemic. Instead, he’s been quoted saying he’s offered free rooms and breakfast to employees so they can continue working in RFR’s office without commuting. That follows years of RFR and Rosen using the hotel for “their own personal gain,” the complaint states.
Worth Noting: A $75 million loan tied to the iconic hotel sold to RDAC 8 LLC in January 2021. JPMorgan Chase sold the debt, which has a maximum principal amount of $75 million.
A market in distress: The hotel industry in New York City has been ravaged by the pandemic. About 80% of hotels backed by the CMBS loans have shown signs of distress, exceeding the national average of 71%. [TRD+PincusCo]
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