Mondrian Soho headed for the auction block

Lender German American is owed more than $250M; Alex Sapir has deal to buy hotel

From left: Alex Sapir and the Mondrian
From left: Alex Sapir and the Mondrian

UPDATED, 10:05 a.m., Dec. 18: The Mondrian Soho – the trendy, 270-room hotel frequented by A-listers – is going to be auctioned off.

Following foreclosure proceedings launched in January 2013 by lender German American Capital Corporation, the hotel, at 9 Crosby Street in Soho, will be sold at a sale scheduled for January 7, 2015, according to court records.

The court granted summary judgment in favor of German American this past July. Developer Sochin Downtown Realty owes the lender, a subsidiary of Deutsche Bank, $250.5 million, plus more than $84,000 each day after August 18, court records show.

Barring any complications at the auction, a group led by Sapir Organization’s Alex Sapir is set to buy the Mondrian.

Before the court ruling in July, German American negotiated a deal to sell the hotel for $205 million to a group including Sapir, Rotem Rosen and Gerard Guez, founder and owner of Buddha Bar. Because the lender controls the mortgage – and not the building itself – the property must be sold at auction.

“The foreclosure sale is a public auction and everyone is welcome to bid in accordance with the terms of sale,” said Robert Weigel, an attorney representing German American.

While it’s unknown if another buyer will swoop in, Morgans Hotel Group, which has managed the hotel since 2011, was interested in buying the hotel at one point.

In October, Morgans filed a lawsuit to keep the hotel in its portfolio, claiming it would be owed $110 million in fees if its 30-year agreement to manage the hotel wasn’t honored.

In its suit, Morgans claimed it tried to negotiate the purchase of Sochin’s loans but was cut out by German American, which negotiated the sale to Sapir. Sapir’s $205 million bid came out on top, according to the suit, while Morgans was “never given the opportunity to match or exceed Sapir’s offer.”

Morgans Hotel Group did not immediately respond to a request for comment.

CORRECTION: This story was edited to include the accurate neighborhood where the hotel is located.