Williamsburg Hotel dispute escalates as pandemic raises stakes

Benefit Street says Toby Moskovits still controls hotel revenues

TRD New York /
Mar.March 19, 2020 08:00 AM
The Williamsburg Hotel at 96 Wythe Avenue and from top: Benefit Street Partners' managing director Micah Goodman, receiver Constantino Sagonas and Heritage Equity Partners’ Toby Moskovits (Credit: Google Maps)

The Williamsburg Hotel at 96 Wythe Avenue and from top: Benefit Street Partners’ managing director Micah Goodman, receiver Constantino Sagonas and Heritage Equity Partners’ Toby Moskovits (Credit: Google Maps)

A month after a temporary receiver was appointed for Toby Moskovits’ Williamsburg Hotel, fighting over the property has veered off into a new direction — and its fate seems cloudier than ever.

In court documents filed Tuesday, lender Benefit Street Partners claims that receiver Constantino Sagonas has violated his marching orders by allowing Moskovits to maintain control of the hotel’s revenue and by ignoring demands for information about the hotel’s finances.


At the same time, the coronavirus pandemic has devastated the hospitality industry.

“The crisis created by the Covid-19 has forced all of us to reassess our priorities and adjust our approach to business,” states the lender’s motion, which seeks to compel Sagonas to abide by the agreement. “But it does not diminish [the] lender’s rights.”

In fact, Benefit Street argues, the situation makes it imperative that the courts force the receiver to act because “the hotel industry, and [the] lender’s collateral in the hotel, is in particular jeopardy.”

Sagonas, who was nominated by Moskovits to serve as the receiver for the hotel in October, has an extensive track record managing hotels around the world, according to court filings. He started his career as a project manager for Hilton International at the Waldorf-Astoria in 1979.

Moskovits, who declined to comment, may file a response to the motion. Sagonas and a representative for Benefit Street did not respond to requests for comment.

Benefit Street says that Moskovits “is likely facing huge pressures on her myriad investments in other unrelated properties.” It wants to prevent the hotel from being used to prop them up.

The motion also claims there is “an ever growing risk, if not certainty” that the value of the hotel will not be enough to cover the $68 million loan.

In addition to the motion to compel Sagonas to comply, Benefit Street’s motion for summary judgment and foreclosure is also pending.

In an affidavit earlier this month, Moskovits argued that the CMBS loan was not really in default because, among other things, the lender demanded an illegitimate rate increase for incomplete work, then denied her the opportunity to exercise an extension option.

Benefit Street increased the interest rate on the Williamsburg Hotel loan by half a percentage point in June 2018 because the developer had not constructed a “fully enclosed rooftop restaurant structure to allow for full-year all-weather operation” or a separate kitchen for the ballroom. Moskovits argued that these features were never required under the loan terms, and that construction was already “substantially complete.”

A court appearance scheduled for Apr. 1 was canceled Tuesday, and judge Barry Ostrager will make a decision on the summary judgment motion without oral arguments.


Related Articles

arrow_forward_ios
(Getty, iStock)

Cash-strapped borrowers are increasingly giving keys back to lenders

Cash-strapped borrowers are increasingly giving keys back to lenders
Investors worry that New York City’s battered commercial real estate sector is indicative of larger issues nationwide with hotels, restaurants and retail. (iStock)

New York’s CRE woes could spread nationwide: investors

New York’s CRE woes could spread nationwide: investors
Magna CEO Robert Indeglia with the Courtyard by Marriott 307 West 37th Street and the Fairfield Inn & Suites at 325 West 33rd Street (Google; Magna)

Magna Hospitality emerges as New York’s hotel vulture

Magna Hospitality emerges as New York’s hotel vulture
Ashkenazy Acquisition's Ben Ashkenazy and Marriott East Side at 525 Lexington Avenue (Google Maps)

Lawsuit accuses Marriott of misappropriating funds at East Side hotel

Lawsuit accuses Marriott of misappropriating funds at East Side hotel
Kroll Bond Rating Agency founder Jules Kroll (Getty; iStock)

Kroll reaches $2M SEC settlement over CMBS, CLO ratings

Kroll reaches $2M SEC settlement over CMBS, CLO ratings
Starwood's Barry Sternlicht and Pacific Retail's Steve Plenge with Parkway Plaza mall in San Diego and the Plaza West Covina mall in Los Angeles (Getty, Starwood, Pacific Retail)

Last bidder standing has big plans for Starwood’s troubled mall portfolio. But first, creditors must sign off

Last bidder standing has big plans for Starwood’s troubled mall portfolio. But first, creditors must sign off
Ian Schrager and the Pulic Hotel at 215 Chrystie Street (Getty; Google)

$60M mezz loan on Ian Schrager’s Public Hotel is for sale

$60M mezz loan on Ian Schrager’s Public Hotel is for sale
Jared Chupaila, CEO of Brookfield Properties’ retail group, with Florence Mall and Fashion Square (Brookfield, TripAdvisor, iStock)

Brookfield and Namdar plan to hand over keys to struggling malls

Brookfield and Namdar plan to hand over keys to struggling malls
arrow_forward_ios

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

Loading...