In another sign of the toll the pandemic has taken on New York City’s hospitality sector, the $195 million mortgage on Vornado’s Times Square hotel is being sold at a major discount.
Andrew Penson, the former owner of Grand Central Terminal, is buying the senior mortgage on the 795-room Crowne Plaza Times Square for about $90 million, sources familiar with the sale told The Real Deal.
That’s roughly 50 percent off the face value of the loan that Deutsche Bank, Morgan Stanley and ICBC provided Vornado to refinance the property at 1605 Broadway back in 2018.
Representatives for Penson’s Argent Ventures, Vornado and the three banks did not immediately respond to a request for comment. A team at Eastdil Secured marketed the debt and negotiated the sale. A representative for the team declined to comment.
Vornado’s 46-story hotel sits in the heart of Times Square, an area that has been hard hit this year. In addition to the hotel portion, the property includes nearly 200,000 square feet of office space and almost 18,000 square feet of ground-floor retail, where tenants include Krispy Kreme’s flagship store.
The hotel draws heavily from tourists visiting the city to see Broadway shows and other attractions. But with the Great White Way mothballed at least through June, the hotel is missing those crowds. The property’s website notes that its concierge service, in-room dining and restaurants are shut down until further notice.
Occupancy figures for the hotel weren’t immediately available, but on Vornado’s most recent earnings call in November, company CEO Steve Roth noted that hotel values have “clearly gone down.”
Penson is best known as the former landlord of Grand Central Terminal. His Argent Ventures purchased the property in 2006 in a deal that included about 1 million square feet of air rights over the train hall, and leased the terminal to the Metropolitan Transportation Authority. Argent sold the air rights in 2018 to JP Morgan, which is using them for its new headquarters at 270 Park Avenue, and sold the land under the terminal to the MTA earlier this year for $33 million.
Hotels across the city are suffering significant declines in valuations. The Surrey Hotel on the Upper East Side recently sold to London’s billionaire Reuben brothers for $65 million — roughly 30 percent off its asking price.