A foreclosure connected to one of New York’s biggest hotels is the latest sign of trouble in the city’s hospitality sector.
Wells Fargo moved Monday to wrest control of the ground underneath the 1,331-room Row NYC Hotel from investor David Werner.
The bank, acting as the trustee for bond investors who hold the $275 million mortgage on the Midtown property, said in a lawsuit filed in Manhattan that Werner started missing payments on the loan in May 2020.
Werner owns the ground below the 28-story hotel at 700 Eighth Avenue with Deutsche Asset & Wealth Management.
The hotel portion itself is owned by Highgate Hotels, the Rockpoint Group and NorthStar Realty Finance. The entity that owns the hotel failed to make payments to Werner and is in default on its lease, according to the lawsuit.
Representatives for all the involved parties did not immediately respond to requests for comment.
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The Row is the fifth-largest hotel in the city. It has had to look beyond tourism and business travel to fill rooms: Mayor Eric Adams’ administration was considering using part of it as an intake center and shelter for up to 600 migrant families, the New York Post reported in August.
The city’s hotel sector overall has been recovering from the pandemic. Hotel data company STR reported New York City occupancy at roughly 83 percent in June.
But some properties have struggled.
Steve Witkoff and Ian Schrager’s downtown Public Hotel defaulted on its $189 million mortgage earlier this year. A partnership between Madison Realty Capital and Newbond Holdings is acquiring the non-performing loan and plans to restructure the debt.
Toby Moskovits and Michael Lichtenstein’s Williamsburg Hotel is being sold out of bankruptcy. And the 452-room Edition Hotel in Times Square fell into foreclosure with a lender group led by Natixis taking over in January.