The Real Deal New York

Hudson Yards-area hotel gets reboot with $40M loan

Long stalled 420-key property will rise across from Javits Center

October 01, 2013 01:05PM
By Katherine Clarke

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Josh Zegen and the 11th Avenue site

Josh Zegen and the site at 488 11th Avenue

On 11th Avenue, a long-delayed 420-room hotel project which first got going in 2007 is back on track thanks to a cash infusion.

Real estate investor and developer David Marx has secured a loan to finally close — for a second time — on a Hudson Yards hotel site at 448 11th Avenue, an executive with the lender told The Real Deal.

Marx previously owned the site, but Lehman Brothers Holdings reportedly took control of it in 2011 after he failed to make loan payments.

Madison Realty Capital, a commercial real estate investment firm, provided a $40.2 million loan, which will go toward paying off a discounted $50 million acquisition loan provided by Lehman. It will also cover predevelopment costs, although the project still requires a construction loan.

The site is located directly across the street from the Jacob K. Javits Center on the corner of 37th street and 11th Avenue.

Marx paid $45 million for the site in 2007 but is paying somewhere “in the mid-$30s” for the site this time around, said Josh Zegen, a co-founder and managing member of Madison. The property was marketed by Andrew Scandalios of HFF.

When constructed, the 265,000-square-foot hotel will feature several food and beverage outlets, as well as meeting space, according to Madison. Marx is currently in discussions with hotel chain operators, Zegen said.

“This was such a massive opportunity to be a part of building a whole city within a city,” he said of the Hudson Yards area. “So many major players are in this market so from a liquidity standpoint, I saw an exit [if the project hit any hurdles].”

Marx was not immediately available for comment.

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