The Real Deal New York

Sapir Organization lands $115M refi for NoMo hotel

Company received the mortgage from Goldman Sachs
By Eddie Small and Chava Gourarie | January 02, 2019 11:15AM

9 Crosby Street and Alex Sapir (Credit: MTB Builders and Getty Images)

The Sapir Organization has refinanced its trendy NoMo hotel with $115 million from Goldman Sachs, according to property records.

The loan also includes a $3 million gap mortgage from the bank and $73.3 million from a Sapir-related company. The money is meant to refinance a $180 million senior loan Credit Suisse provided in 2015 for the acquisition of the hotel. A year later, Sapir purchased the note, which included a $130 million senior loan and a $50 million mezzanine loan, for $175 million.

The hotel is located at 9 Crosby Street in Soho. Sapir Organization CEO Alex Sapir and his partner Gerard Guez bought it from Deutsche Bank at a foreclosure sale in 2014 for $205 million.

Sapir consolidated ownership at the hotel last year. He paid an undisclosed sum to buy Guez’s 49 percent stake in the property, giving him 99 percent ownership of the 26-story, 264-room building. It is valued at more than $246 million.

The firm was unable to get more than $115 million because of the hotel’s finances, according to documents on the Tel Aviv Stock Exchange. Its stocks have recently taken a beating, dropping 43 percent year over year and 18 percent this month.

The original loan was set to mature in March 2017, but the due date was extended several times. The Sapir entity that acquired the loan agreed to postpone an interest-rate increase that should have kicked in with the first extension, until September 2018. At that point, the interest rose to 5.25 percent over LIBOR.

Sapir, a public company in Israel, was under pressure to replace the loans, but with the hotel operating at a loss, that proved a challenge. “The current cash flow from the hotel does not allow the taking of a loan of $180 million, but a significantly lower amount,” Sapir reported to TASE.

In the third quarter, the hotel reported a $3.4 million operating loss, which combined with $10.6 million financing expenses, resulted in a $14 million net loss. The NOI for the hotel was $5.9 million through the third quarter of 2018, slightly higher than the $5.6 million during the same period in 2017.

The interest rate on the two new loans combined is 5.24 percent, or roughly equal to the rate on the previous debt.

Elsewhere, Sapir bought a five-bedroom, 7,100-square-foot home on the Venetian Islands in March for $17 million and led a $70 million funding round with Newmark Knight Frank for Knotel that valued the company at $500 million.