Tribeca’s upcoming “Hotel Barrière Le Fouquet” seems to have encountered a barrière.
The partnership behind the 96-key luxury hotel development at 456 Greenwich Street filed for Chapter 11 bankruptcy protection on Thursday, claiming that it was necessary to protect its investment after its landlord made it impossible to secure financing for the project.
“The partnership has been in discussions with various lenders to complete the project financing, but the landlord’s President, Vincent J. Ponte, has refused to approve various standard loan and financing terms which are common in the market that have been presented to him,” said Ivaylo Ninov of Mactaggart Family & Partners, speaking as principal of the general partner in a statement. “The partnership is confident that financing will be obtained through the bankruptcy process to complete the project.”
CBCS Washington Street LP — a partnership between Western Management Corp. and Caspi Development Corp. — leased the site in 2013 from Ponte Equities, one of Tribeca’s biggest landlords. According to the bankruptcy filing, the initial lease established a few milestones: Construction was required to commence by June 19, 2015, and to be completed by June 19, 2017.
At the same time, the lease allegedly contained terms that made it near impossible to land a construction loan.
In particular, anti-assignment provisions meant that lenders would not have a clear path to foreclose on the project and complete it, or to sell the debt to a third party at a later time. One prospective lender walked away after four months of negotiations, and the partnership ended up breaking ground on the project using its own money, in the hope of eventually coming to an agreement with the Pontes, according to the filing.
The developers said they were also made to pay multiple extension fees, as well as the Pontes’ legal fees, in order to avoid default on the lease. They also claim the landlord was “unjustifiably enriched to the extent of almost $5 million” before agreeing to a number of changes to the lease. But the anti-assignment provision remained, another prospective lender came and went, and the project was left in the same bind as before.
Ponte Equities did not respond to a request for comment.
“As it now stands, [the developers] may lose their entire equity investment due to the rejection of standard requests made by financing sources,” Michael E. Lefkowitz of Rosenberg & Estis said.
The development is currently scheduled to open in 2021 under the international brand “Hotel Barrière Le Fouquet.” This hotel chain, owned by Groupe Lucien Barrière, primarily operates five-star hotels in France, as well as one in Morocco and one in the Caribbean.
The recent wave of development in Tribeca has been a boon for the Ponte family, which first opened a steakhouse at 39 Debrosses Street in the late 1960s, one block away from the 456 Greenwich site.
The site of the family restaurant and adjacent parcels were sold to the Related Companies for $115 million in 2015, and is now home to the 70 Vestry Street luxury condominium.
Ponte Equities bought 15 units at the development last month, activating a clause in the project’s condo offering plan. It is unclear what the family plans to do with these units.