Deutsche Bank has filed suit against Sochin Downtown Realty and Morgan’s Hotel Group to foreclose on $196 million in loans backed by the Mondrian Soho. Deutsche Bank, in the Jan. 16 suit filed in New York State Supreme Court, alleged that Sochin defaulted after failing to make a payment on Nov. 15, the extended maturity date on the loans. According to the suit, Sochin originally took out three loans with CapitalSource Finance in July 2007, including a $97.6 million building loan, a $61.3 million project loan and a $36.3 million acquisition loan. The company later hired Morgan’s Hotel Group to manage the 270-room property.
By July 2010, the original loans were modified, with investors Curtis Bashaw and Craig Wood of Sochin signing a deal with CapitalSource Finance. The loans were later sold to Deustche Bank in July 2011. The current loan balance includes $36.4 million for the acquisition loan, $53 million on the project loan, $106.7 million on the building loan, plus $20.8 million in unpaid interest and a $199,000 exit fee.
According to the suit, Deutsche Bank is asking for the right to sell the hotel debt and that any party in the suit be granted the right to become a purchaser.
A source familiar with the deal said there are no plans to change operations during the foreclosure case.
Deutsche Bank declined comment. A spokesman for Morgan’s was not available for comment. Sochin officials were not immediately available for comment.