Nakash Allegedly Defaults on Hotel Lincoln Loan

The Nakash family’s grip is slipping on another hotel, this time in Chicago.

An affiliate of New York-based landlord Nakash Holdings, whose founding family members made fortunes as the manufacturer of the Jordache denim brand and other apparel businesses, allegedly defaulted on a $35 million debt package for the 184-room Hotel Lincoln property at 1816 North Clark Street, according to public loan data.

The Nakash family’s loan for the property landed in special servicing last month, after it reached its March 6 maturity without repayment, becoming another casualty of tight commercial debt markets, loan data shows.

Special servicer LNR Partners is mulling whether to grant Nakash an extension of the loan to give the landlord more time to repay it. The landlord requested a three-year extension, and LNR has sent a pre-negotiation letter to Nakash representatives that will allow the parties to negotiate, loan data collected by Morningstar Credit shows.

The Nakash family, founders of Jordache Enterprises, acquired the vintage hotel overlooking the Lincoln Park Zoo in 2016 for $73 million from a venture of billionaire Neil Bluhm’s Chicago-based commercial real estate giant Walton Street Capital. A decade later, the mortgage attached to the property is feeling squeezed.

Representatives of Nakash and LNR didn’t return requests for comment.

If recent hotel deals in the area are any indicator of the value of the Hotel Lincoln, the current appraisal on Nakash’s property could be well short of the landlord’s total investment.

Last year, the Claridge House Hotel, less than a mile south of the Hotel Lincoln, sold for less than two-thirds of the overall $33 million investment Interwest Capital Group paid to buy and renovate the property over a nine-year holding period. Also in the Gold Coast, just south of Lincoln Park, investor Vijay Patel purchased a property known as the Tremont Hotel out of financial distress earlier this year for just $13.2 million. That’s down from a nearly $20 million loan on the 122-room property that its last owner obtained before falling into default.

This isn’t the first sign of financial trouble for the Nakash family’s hospitality portfolio in recent months. In October, the family defaulted on a $28 million loan tied to the South Beach Breakwater Hotel in Miami Beach. That loan’s special servicer, CW Capital Asset Management, said the property is covering the cost of its debt service and is similarly considering whether to grant a maturity extension to the Nakash-backed borrower, loan data collected by Morningstar Credit shows.

Nakash is also familiar with Chicago’s unforgiving lending environment. Nakash has long owned the mixed-use office and retail building at 645 North Michigan Avenue in partnership with fellow New York-based real estate firm Feil Organization. In late 2023, the partners managed to snag a $55 million refinancing on the Magnificent Mile property, but only by securing $10 million less than the debt they were replacing — a scenario that likely required the borrowers to inject fresh equity to bridge the gap.

Whether Nakash will write another check to rescue the Hotel Lincoln remains to be seen. With the debt officially categorized as a non-performing matured balloon, the special servicer and borrower will have to quickly hammer out a resolution or risk further distress on the exposed loan note.