Mezzanine lenders could lose W Hotel

TRD New York /
Jun.June 02, 2010 11:45 AM

W Hotel in Union Square

The 270-room W Hotel in Union Square changed hands in December after the private equity division of Dubai World defaulted on a $117 million mezzanine loan. But the lender, LEM Mezzanine, could lose the hotel in the coming months as a result of its filing for bankruptcy protection earlier this year, the New York Times reported. Mezzanine loans, which are secured by stock or other ownership stakes in a company, became a popular form of secondary financing during the real estate boom, offering high returns to investors and high interest rates for borrowers. There is an estimated $100 billion in mezzanine loans outstanding across the country. But despite built-in risks, lenders say these loans are beginning to resurface. “It’s become something people want to do again,” said William Shanahan, a vice chairman at CB Richard Ellis who specializes in investment properties in New York. “I think it’s fair to say that right now the desire to place mezzanine debt outweighs the demand for it, but a lot of people are looking to put mezzanine loans on their properties.” Since mezzanine loans come second in priority to the first mortgage and are typically secured by stock in the company, many building owners who financed property at the height of the real estate bubble, including the proprietors of the W Hotel, were at the mercy of mezzanine lenders after the economy soured. [NYT]

 

Related Articles

arrow_forward_ios
51 West 52nd Street and ViacomCBS CEO Bob Bakish (Credit: Google Maps and Getty Images)

Following merger, Viacom could sell CBS’ Midtown HQ

William Shanahan (Photo by Studio Scrivo)

The Closing: Bill Shanahan

Union Square W Hotel at  201 Park Avenue South (Credit: Wikpedia)

Marriott buys Union Square W Hotel

mary ann tighe

WATCH: Mary Ann Tighe on rebuilding Lower Manhattan after 9/11

Who needs New York? Garden State multifamily portfolio trades for $146M

Who needs New York? Garden State multifamily portfolio trades for $146M

The CVS at 99 Greenwich Avenue in Greenwich, Connecticut (courtesy of Midwood).

How much for that CVS building? In Greenwich, the price is $30M

Vineyard Vines HQ sold in Stamford, Avon inks Rye deal & more Westchester and Fairfield real estate news

Vineyard Vines HQ sold in Stamford, Avon inks Rye deal & more Westchester and Fairfield real estate news

Mack-Cali sells Paramus office property, Murphy enacts land bank reforms & more North Jersey real estate news

Mack-Cali sells Paramus office property, Murphy enacts land bank reforms & more North Jersey real estate news

arrow_forward_ios
Loading...