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New York

MCR, Island Capital refinance Sheraton Times Square, exit forbearance

Fortress provides $260M refi a month after mortgage matured

MCR Refinances Sheraton New York Times Square for $260M
MCR’s Tyler Morse, Island Capital’s Andrew Farkas and 811 Seventh Avenue (Getty, Google Maps)
By
Nov 15, 2023, 12:18 PM

MCR Hotels and Andrew Farkas’ Island Capital have refinanced a $250 million loan on the Sheraton Times Square Hotel that had been in forbearance.

The $260 million refi comes from affiliates of Fortress Investment Group. The floating-rate loan matures in four years, according to JLL, which helped arrange the financing.

MCR and Island Capital bought the 1,780-key hotel at 811 Seventh Avenue in April 2022 for $373 million from Host Hotels & Resorts. The seller provided the $250 million loan, which expired Oct. 18. The last-minute forbearance agreement was set to expire Nov. 8, but was extended.

JLL’s Kevin Davis and Mark Fisher brokered the deal.

JLL’s Kevin Davis and Mark Fisher (JLL)

The 50-story hotel, which opened 61 years ago, is one of the largest in the city. It sold in 2006 for $738 million, nearly twice the price it fetched 16 years later. The venue has 61,800 square feet of meeting space and a 23,000-square-foot ballroom.

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Fortress, Madison Realty Capital and other alternative lenders with higher risk tolerance than banks have stepped up their real estate lending as conservative financial institutions have pulled back. Rising interest rates, along with several high-profile bank failures, have constrained real estate financing.

Fortress bought $1 billion of office loans from Capital One this summer. 

MCR Hotels, the third largest hotel owner-operator in the U.S., acquired the Gramercy Park Hotel lease in August for $50 million. It also owns the TWA Hotel at JFK Airport, the New Yorker hotel and the High Line Hotel.

Tourism to New York City has returned to pre-pandemic levels, although business travel has not. 

In a press release, Tyler Morse, chairman and CEO of MCR, said, “The hotel’s performance has rebounded since we acquired the hotel, which we believe is a testament to the strength of New York City’s lodging market.”

In the same release, Kevin Davis, Americas CEO of JLL’s Hotels and Hospitality group, called the refinancing “indicative of improved debt capital markets sentiment in New York, which we expect will persist as the hotel market continues to benefit from the recovery of group, business transient and foreign travel demand.”

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HotelsIsland CapitalMCRRefinancingTimes Square