DelShah escalates battle for control of Flatiron Hotel

New York /
Nov.November 06, 2013 08:11 AM

DelShah Capital has stepped up its efforts to wrest control of the Flatiron Hotel. The firm, which owns the debt on the property, is seeking a court order forcing the beleaguered owners and property manager Smart Apartments to pay it rent directly, as well as hand over a bevy of documents necessary to operate the property.

An affiliate of DelShah, led by CEO Michael Shah, originally sued the owners of the hotel at 1141 Broadway in September in New York State Supreme Court, as The Real Deal reported. The company, which acquired the hotel’s outstanding mortgage debt earlier this year, claimed that Smart Apartments failed to start paying rent directly to DelShah instead of the owners, as required under a lease agreement, and racked up 15 building code violations.

On Monday, DelShah requested an injunction against the owners — Ibrahim Saleh, Main Team Hotel and Ming Chu Company — and Smart Apartments, a defunct operator of short-term rentals led by Robert “Toshi” Chan, to enforce direct lease payments and get access to lease agreements, maintenance contracts and other documents needed to operate the property.

DelShah is seeking to take over the hotel and replace Smart Apartments, as well as secure $618,000 in damages for allegedly unpaid rent. Smart Apartments operates the Flatiron for the owners, but was effectively shut down earlier this year by the city for allegedly operating illegal apartments.

The defendants’ “refusal to acknowledge [DelShah] as ‘successor landlord’ is contrary to the explicit terms of their lease agreement and acts to deprive [DelShah] of the benefit of preserving and maintaining the subject property,” the company said in an affidavit.

Lawyers for the hotel owners and Smart Apartments were not immediately available, nor was a spokesperson for DelShah or officials at the Flatiron.

The code violations include illegal scaffolding and working without permits, according to DelShah’s filing.

DelShah bought the debt at the Flatiron in May from Brick Realty Capital, which acquired the original $8 million defaulted mortgage from First Central Savings Bank, a Long Island lender.


Related Articles

arrow_forward_ios
The grand reopening: As restrictions lift, CRE markets race toward recovery
The grand reopening: As restrictions lift, CRE markets race toward recovery
The grand reopening: As restrictions lift, CRE markets race toward recovery
The commercial market was hit hard by the pandemic, and property tax revenue is expected to fall 5 percent. (iStock)
Tax bills show how much Covid devalued NYC real estate
Tax bills show how much Covid devalued NYC real estate
Acting Katara CEO Andrew Humphries and 355 West 16th Street (Google Maps, AHIC)
Katara Hospitality takes over Dream Downtown’s $125M ground lease
Katara Hospitality takes over Dream Downtown’s $125M ground lease
About 38 percent of New York hotels with loans in commercial-mortgage backed securities were 30 days or more past due in May. (iStock)
Hotels’ recovery taking longer in NYC than elsewhere
Hotels’ recovery taking longer in NYC than elsewhere
Gowanus Inn & Yard at  645-651 Union Street, Brooklyn, Sonder CEO Francis Davidson and Red Pine Principal Michael Federman (Google Maps, Sonder, Federman Steifman)
Sonder takes lease for 76-key Gowanus Inn
Sonder takes lease for 76-key Gowanus Inn
Starwood CEO Barry Sternlicht and Blackstone CEO Stephen Schwarzman (Getty)
Blackstone, Starwood up bid for Extended Stay America
Blackstone, Starwood up bid for Extended Stay America
Abraham Merchant of Merchants Hospitality, 11-01 43rd Avenue and Frank Brosens of Taconic (Merchants Hospitality, Getty, Savanna Rooftop)
Merchants Hospitality sells dormant LIC hotel for $38M
Merchants Hospitality sells dormant LIC hotel for $38M
Retailers rush to open in the Hamptons
Retailers rush to open in the Hamptons
Retailers rush to open in the Hamptons
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...