Alex Sapir’s firm scored a much-needed $88.6 million loan from the Israeli bond market for its NoMo SoHo hotel.
Sapir Corp faced a tight deadline to raise the money in Israel. Earlier this month, Sapir’s lender offered the firm a $5 million discount on its $105 million senior loan if it repaid its outstanding debt by Aug. 18, according to a filing on the Tel Aviv Stock Exchange.
Sapir Corp beat the clock. Its Israeli money will be used to pay down the senior loan from Goldman Sachs. The new financing will mature in 2026 with an interest rate of 6.75 percent, according to the stock exchange.
The Israeli bonds began trading this week.
The deal is not only a positive sign for Sapir, whose hotel struggled like most others during Covid, but also for the Israeli bond market. A few years ago, New York developers flooded the Israeli bond market for cheap financing, but as large issuers such as All Year Holdings missed interest payments to bondholders, demand waned.
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Sapir Corp’s refinancing had a few moving parts. The firm first nabbed a $10 million loan secured by the remaining unsold unit at its 16-unit luxury condo complex in Surfside, Florida. Sapir Corp said it planned to transfer $9.75 million of that $10 million loan to pay down its debt at the Nomo Soho.
Sapir Corp’s CEO Sharon Raz said the decision to raise money in Israel was “in light of the current conditions of the financial markets and rising interest rates.” It said it will refinance the senior debt of the Soho hotel “well in advance of its scheduled maturity date in April 2023.”
The senior lender was not named in Tel Aviv Stock Exchange filings. But New York property records show that Goldman Sachs in 2019 provided a $115 million refinancing which partly refinanced a $180 million senior loan from Credit Suisse four years earlier. The senior loan was set to mature by January 2023, but had an option for a three-month extension.
The Soho hotel took a beating during the pandemic. The corporate entity owning the hotel, 9 Crosby Partners LLC, lost $11 million last year, according to a filing in Tel Aviv.
But things have improved since tourists started returning to New York City. In its quarter ending in June, Sapir Corp reported a $1.38 million profit; a year earlier it had lost $3.8 million. Occupancy improved to 78.4 percent in the first half of this year, up from 52.2 percent in 2021.
Still, a recent appraisal valued the hotel at $197 million, lower than the $205 million Alex Sapir and his partner Gerard Guez paid for the 26-story hotel from Deutsche Bank at a foreclosure sale in 2015. Sapir eventually bought out Guez.
Tel Aviv filings also revealed new details about the hotel. Sapir Corp is planning a $20 million renovation that includes bringing the lobby to the ground level, according to its appraisal report. In April, the hotel company signed an agreement with LDV Hospitality Holdings to develop food and beverage offerings at the hotel, including a restaurant, gallery space, and night club. It plans to open a restaurant called “Cala Scarpetta” in 2023.
Alex Sapir is the son of the late Tamir Sapir, a Georgian-born billionaire who was perhaps best known for partnering with Donald Trump on the Lower Manhattan project Trump Soho.
In recent months, the scion has faced some struggles. Sapir failed to pay off a $231 million CMBS loan for two office towers at 260 and 261 Madison Avenue before its mid-June maturity date, according to Trepp, a data service that tracks securitized mortgages. Sapir has now entered into a forbearance agreement.
Sapir is also involved in messy litigation with his former brother-in-law, Rotem Rosen.