Katara Hospitality takes over Dream Downtown’s $125M ground lease
Deal follows default on $80M loan by Sahara Group
Katara Hospitality has taken over the ground lease of the Dream Downtown hotel in a deal valued at $125 million, according to property records.
The transaction resulted from an apparent default by Subrata Roy’s Sahara Group on an $80 million loan which Katara owned — and was secured by a leasehold on the hotel at 355 West 16th Street in Chelsea, records show.
Katara, a subsidiary of Qatar’s sovereign wealth fund, granted Sahara forbearance on the loan following a default triggered in October 2020, according to an agreement signed by the hotel’s operator, Dream Hotel Group. The agreement notes Sahara struck a deal to avoid foreclosure, but no further details were provided.
The deal will not affect Dream Hotel Group’s 32-year agreement to operate the hotel, according to its CEO Jay Stein. Dream began operating the hotel in 2012, according to property records.
Sahara paid $217 million in November 2012 for the land and Dream Hotel above it, where rooms feature circular windows — not be confused with the porthole-themed Maritime Hotel next door. The Dream Downtown reopened in May following its pandemic-related closure.
Worth Capital Holdings — which is tied to Charles R. Holzer, son of Warhol Superstar “Baby Jane” Holzer — purchased the hotel itself for $175 million in 2019.
Katara and Sahara did not immediately reply to requests for comment.
The two hotel conglomerates held similar negotiations in 2018 when Katara took full ownership of the Plaza Hotel in lieu of foreclosing on loans Sahara had borrowed, sources told The Real Deal at the time.
Industry observers have wondered when hotel assets might begin selling at discounted prices due to the pandemic. The sector has begun to show signs of recovery, with occupancy in the U.S. reaching 61.8 percent by the end of May, its highest level since late February 2020, according to data firm STR. That figure does not factor in hotels forced to close during the pandemic.