SL Green Realty has to sell its $120 million stake in Times Square’s Crowne Plaza hotel after a judge ruled that investor Andrew Penson has the right to buy it.
The Marc Holliday–led REIT and Penson’s Argent Ventures have been tussling since the fall for control of a small but strategic piece of land underneath the 795-room hotel at 1601 Broadway, which is in default on its $330 million mortgage.
The ownership of the property is as labyrinthine as a big hotel chain’s points system.
The hotel sits on a parcel of roughly 30,000 square feet, about a third of which had been owned for a long time by the Walber family. The Walbers leased their section to Vornado Realty Trust, which owned and operated the hotel.
Under the leases, Vornado had the first right to purchase the Walbers’ property if it ever came up for sale.
But in March 2020, the hotel — like many across the city during the pandemic — shut its doors and fell behind on its mortgage. Penson came into the picture late last year, when his company bought the mezzanine debt on Vornado’s leasehold for pennies on the dollar.
Penson’s Argent Ventures then replaced Vornado’s managers at the hotel and started sweeping the hotel’s revenues to service the debt, leaving unpaid rent bills to the Walber family and delinquent tax bills with the city.
In August, SL Green offered to buy the Walbers’ property, triggering the hotel owner’s right of first offer. Penson argued that right fell to the Vornado entity that held the lease, and sent over a sale agreement and a $30 million deposit.
But the Walbers argued that Penson had nullified the arrangement by replacing Vornado’s managers. Penson sued to enforce the contract but the Walbers went ahead and sold the property to SL Green for $121 million.
A Manhattan Supreme Court justice earlier this month ruled that Penson’s right to purchase the property was intact, essentially ordering SL Green to sell its stake.
“They’re entitled to enforce what they bargained for,” judge Jennifer Schecter said at a late March hearing.
A spokesperson for SL Green declined to comment, as did attorneys for the Walbers. Representatives for Argent Ventures did not respond to a request for comment.
Penson hasn’t seen his last day in court. The Riese family, which owns a small piece of property at the corner of West 49th Street and Broadway that’s been incorporated into the hotel, filed a lawsuit last year claiming the hotel owes more than $1.8 million in rent.