New York City’s hotel industry is struggling, and one hotel owner has now secured federal assistance to help keep the lights on.
Rotem Rosen’s MRR Development secured a $1.7 million Paycheck Protection Program loan for the Hotel Indigo Lower East Side at 171 Ludlow Street, according to a disclosure published Thursday to the Tel Aviv Stock Exchange.
The company also expects a $800,000 loss for the hotel in the first quarter, according to preliminary estimates — a stark reversal from the $400,000 profit it had made in the first quarter last year. The hotel had seen strong performance in 2019, with annual net operating income passing the $10 million mark for the first time.
“MRR is proud to keep the hotel open even though ownership is not making money, to show solidarity with the community and to be open to anyone who needs to come and stay at the hotel — and to keep New York going,” a spokesperson for the owners said.
MRR also has an insurance policy for the hotel that specifically covers “diseases and epidemics” — a somewhat rare occurrence — and has notified its insurance provider that it intends to file a claim, according to the financial disclosure.
The $2 trillion stimulus package, signed into law in late March, set aside $349 billion for PPP loans. On Thursday morning, the Small Business Administration announced it has already reached that limit and is no longer able to accept new applications.
The two-year financing carries a low interest rate of 1 percent, and loan proceeds spent on payroll, mortgage payments and utilities within the first eight weeks are eligible for forgiveness. That eight week-limit has generated some confusion among borrowers, and also made those loans less accessible for the many hotels and restaurants that are currently shut down.
Food and beverage services at the Hotel Indigo, as well the rooftop lounge known as Mr. Purple, have been shut down for a month following a statewide order.
The hotel’s staff are employed by the management company, InterContinental Hotels Group, and are members of the New York Hotel and Motel Trades Council — nearly half of whose members have been laid off amid the coronavirus crisis. An appraisal filed with the Tel Aviv Stock Exchange shows that MRR had budgeted $9.2 million for room expenses in 2020, much of which goes toward wages.
MRR acquired the 26-story, 294-key hotel for $162.5 million in 2018, and financed the acquisition with a $73 million bond issuance on the Tel Aviv Stock Exchange, secured by a first mortgage on the property.
Rosen’s 50-50 partner in MRR is Indian billionaire Anand Mahindra, chairman of Mahindra Group. The conglomerate announced Thursday that it would be retooling its Detroit automobile manufacturing facility to produce face shields and medical supplies for health care workers combating the pandemic.
View this post on Instagram