UPDATED, Aug. 13, 9 p.m.: The financially troubled and now-closed Hotel Astor is on the market for $12 million.
The 42-room, three-story hotel at 956 Washington Avenue was renovated in 2014 using $9 million raised from EB-5 investors. It closed nearly a year ago after the ground lessor, 1651 Astor LLC, filed a lawsuit to evict the hotel from the property.
The leasehold interest in the property is listed for $12 million, or nearly $286,000 per key. David J. Hart, the previous owner of Astor EB-5 LLC, the lessee, stepped down in April, court records show. Astor EB-5 filed for Chapter 11 bankruptcy in November.
The Art Deco hotel was built in 1936 and was designed by T. Hunter Henderson. The property includes a private pool and courtyard, fitness room and a 5,000-square-foot restaurant and bar.
The court would have to approve the sale of the hotel. Because it was remodeled in 2014, the property doesn’t need to be renovated. About 90 years remain on the ground lease at a cost of about $39,500 per month, triple net, according to an offering memorandum.
Hart, an attorney, raised money via investors from Brazil, China and Venezuela. The project was granted EB-5 status in 2015. The The EB-5 program allows foreign investors to get a green card in exchange for investing at least $500,000 in a U.S. enterprise and creating at least 10 jobs.
According to court filings, Hart “regularly commingled personal funds with those of the business and otherwise used the hotel as his own personal piggybank,” which led to the business losing money, the debtor in possession is alleging.
Prior to the Chapter 11 filing, the hotel was sued by a number of entities, many of which alleged they were owed money from Astor EB-5 LLC. SMS Lodging, which was hired to manage the hotel, sued in April 2018 for nearly $163,000 of allegedly unpaid bills. Allen, Norton & Blue, P.A., a law firm, filed suit over nearly $17,000 in unpaid legal bills. And former employees also sued the lessee.
In November, new rules governing the EB-5 program will go into effect. Earlier this year, the Trump administration released changes to the federal cash-for-visas program. The minimum that an investor has to put into a project in high-unemployment areas will jump to $900,000. The new rules will also make it more difficult for developers and state governments to gerrymander census tracts together to qualify real estate developments in areas that may not otherwise meet the program’s unemployment requirements.
Correction: An earlier version of this story incorrectly stated that Manny Chamizo of One Sotheby’s International Realty was hired to sell the property. There is no listing agent, according to Adam Skolnik, the bankruptcy attorney for Astor EB-5 LLC.