Court rules Ashkenazy must pay share of $135M Marriott loan

Firm owns 15 percent stake in shuttered hotel through strained joint venture with German investor

New York /
Jul.July 12, 2021 09:33 AM
525 Lexington Avenue and Ben Ashkenazy (Photos via Google Maps, Getty Images)

525 Lexington Avenue and Ben Ashkenazy (Photos via Google Maps, Getty Images)

An appellate court finally dropped the curtain on the legal drama over the New York Marriott East Side hotel.

A judge ruled Thursday that Ashkenazy Acquisition Corp. must pay its share of a $135 million loan on the Marriott at 525 Lexington Avenue that the firm committed to as part of a joint venture with German guarantor Deka Immobilien Investment GmbH, Commercial Observer reported.

The partnership, named Lexington Avenue Hotel LP, had initially snagged the 655-room Marriott in 2015 for $270 million, with Deka holding an 85 percent stake.

Three months after the Marriott closed in March 2020 — a temporary closure that became a permanent one in October — the German lender on the loan, Bayerische Landesbank, came knocking, the Commercial Observer reported.

Deka paid in full to resolve the debt, then sued the joint venture in August for the balance, aiming to avoid a trial.

A lower court initially ruled that the dispute should go to trial, but the appellate court tossed out that decision, ruling instead that the loan agreement stipulates the joint venture is on the hook for the balance.

The decision concludes a laundry list of lawsuits over the East Side Marriott. Deka sued Ashkenazy in 2019 for allegedly reneging on a $174 million agreement to take full control of the hotel. The joint venture then sued the Marriott in October 2020 over $12 million in misappropriated revenue. And in February, lender DekaBank, parent company to Deka, foreclosed on the hotel over a $53 million outstanding mortgage.

[Commercial Observer] — Suzannah Cavanaugh





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