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New York

GFI sells ground under Ace Hotel in Brooklyn for $45M

iStar becomes land owner, mortgage lender at 61 Bond Street

 61 Bond Street in Brooklyn, iStar's Jay Sugarman and GFI's Allen Gross (Photos via Google Maps, iStar and Urban Land Institute)
61 Bond Street in Brooklyn, iStar's Jay Sugarman and GFI's Allen Gross (Photos via Google Maps, iStar and Urban Land Institute)

UPDATED, Feb. 11, 2021, 11:55 a.m.: Development firm GFI Capital Resources has sold the ground beneath its 285-key Ace Hotel development at 61 Bond Street in Boerum Hill to Safehold for for $45 million, property records show.

Now, GFI, led by Allen Gross, will make ground lease payments to Safehold, the real estate investment trust managed by Jay Sugarman’s iStar Financial.

The agreement, dated Feb. 1, also returns iStar as the primary lender on the project. It provided a $50 million construction loan for the building in 2016 before assigning the financing to Los Angeles-based Pacific Western Bank. Now, it holds a $35.8 million loan on the project.

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GFI paid nearly $13.5 million for the site, also known as 252 Schermerhorn Street, in May 2014, property records indicate. The hotel is set to open in the spring, according to a recent report from Travel and Leisure.

New York hotels, whose occupancy rates have been clobbered by the pandemic, appear ripe opportunities for investors. Hedge funds have reportedly been eyeing loans on distressed hospitality properties.

In June,GFI picked up an additional 61 percent stake James Hotel in NoMad in a $110.5 million deal. The company’s hotel holdings also include the 179-key Ace Hotel Palm Springs in California and a 35-percent stake in the Beekman Hotel and Residences in New York’s Financial District, which has 287 hotel rooms and 67 condos.

iStar and GFI did not immediately respond to requests for comment.

UPDATE: This story has been updated to specify that ground lease payments will be made to Safehold. 

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Boerum HillBrooklynHotelsInvestment SalesReal Estate Finance