The Real Deal New York

Moinian defaults on W New York-backed loan, says continues to make payments

February 25, 2010 03:21PM
By David Jones

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The W Hotel

The Moinian Group is negotiating with lenders after defaulting on a collateralized $25 million mezzanine loan last October, backed by the W New York Downtown Hotel & Residences, The Real Deal has learned.

Fitch yesterday downgraded a $942 million collateralized debt obligation issued by Realty Finance, a Rocky Hill, Conn.-based lender. Two of the three largest loans in the pool were backed by the W New York and the Riverton, a 1,230-unit multi-family complex in Harlem.

Moinian, led by developer Joseph Moinian, defaulted on the loan amid budget problems and construction delays, according to Fitch. Fitch said it “modeled a full loss on this highly-leveraged mezzanine loan,” however the ratings agency told The Real Deal that Moinian is currently negotiating with CW Capital Asset Management, the special servicer on the loan.

Moinian confirmed through a spokesperson that he is in talks with CW Capital and said he is continuing to make interest payments.

“No action has been taken against them and they are continuing to work with the special servicer to arrange new terms,” the spokesperson said in an e-mailed statement.

The W New York, at 123 Washington Street, has been one of the most high-profile condominium-hotel projects in Lower Manhattan. The project, designed by Gwathmey Siegel & Associates, includes 217 hotel rooms and 223 private residences.

The project has incurred significant delays since construction began in 2006, with more than 30 full or partial stop-work orders.

The project was originally scheduled for completion by 2008, but is now slated to open in May 2010.

More than $5.8 million in mechanic’s liens have been filed against the property since May 2009. Tishman Construction, the construction manager at the project, was not immediately available for comment.

At the Riverton Houses, at 2156 Madison Avenue, an auction of the $240 million senior mortgage loan balance is scheduled for March 11. Realty Finance had previously scheduled a February 2009 auction of its $25 million mezzanine loan, but canceled the sale. The firm later sued developer Larry Gluck in 2009 to block the auction of the senior debt, but a state Supreme Court judge recently ordered the auction to go forward. 

Beth Orcutt, a spokesperson for CW Capital, said the firm does not comment on client matters, in a voicemail message.

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