Facing foreclosure, world’s tallest Holiday Inn files for bankruptcy
Developer Jubao Xie looking for negotiating leverage with special service
The Holiday Inn hotel in the Financial District filed for bankruptcy as its owner looks to avert foreclosure.
Developer Jubao Xie put the 492-room hotel at 99 Washington Street into Chapter 11 Tuesday, explaining that the hotel is performing well after being hurt by Covid but needs to renegotiate with creditors.
At issue is how much money Xie must pay to cure the hotel’s defaulted mortgage.
The owner’s missed payments total about $10 million, according to his bankruptcy attorney Scott Markowitz of Tarter Krinsky & Drogin. That’s not an impossible figure to come up with, the lawyer said.
But default interest adds $16 million to that, Markowitz said, plus late fees and workout fees. Considering the impact the pandemic had on the hotel, he said, the servicer on the loan should be more flexible in negotiating with Xie.
“There’s a big difference between $10 million and $26 million,” he told The Real Deal. “From our perspective, we think it’s unfair because of Covid.”
The special servicer, Midland Loan Services, did not immediately respond to a request for comment.
Xie and his attorneys said in court filings that the hotel was set back by the Covid shutdown and the Omicron surge, but now has enough cash flow to make its debt payments.
Court papers list assets of $177.6 million and liabilities of $143.3 million. Xie said he lent millions of dollars to the hotel to keep it going during the pandemic and needs bankruptcy protection to preserve his equity in the face of foreclosure.
Xie developed the 50-story hotel in 2010 with Sam Chang and took full control of the hotel in 2014. He refinanced in 2018 with a $137 million loan from Ladder Capital, debt which is now split into several tranches held by CMBS bondholders and Triangle Capital Group.
The hotel owner defaulted in 2020. This March, Wilmington Trust, the trustee for the bondholders, filed to foreclose on the property.
Xie said in filings that the hotel has bounced back in the past six months, with occupancy exceeding 90 percent in September and October.
Despite the rebound in tourism, New York hotels have struggled as business travel and events have not fully recovered.
In September, lenders filed to foreclose on the ground underneath the 1,331-room Row NYC Hotel near Times Square and the 697-room Maxwell NYC on Lexington Avenue.
Some 10,000 rooms never reopened after the initial shutdown in 2020.