Does Northwind Group have an ace up its sleeve?
As David Paz fights to save the former Ace Hotel on the Lower East Side from foreclosure, his embittered partner Northwind is doubling down — likely in a bid to take it over.
Northwind, a Manhattan-based lender and equity partner in Paz’s shuttered hotel at 225 Bowery, bought a $68 million loan on the property from Bank Hapoalim, which had decided to sell the debt after trying for months to foreclose on the hotel.
Paz’s Omnia Group, the hotel’s principal owner, put the property into bankruptcy in January to delay the foreclosure attempt. Bank Hapoalim claimed Omnia owed about $78 million, including interest and other fees.
By taking over the debt, Northwind has positioned itself to acquire the property outright, either through a bankruptcy sale or a foreclosure. PinscusCo first reported the loan sale.
It’s the latest turn in a drama that started in 2014, when Omnia acquired the 10-story tenement between Stanton and Rivington streets for $30.5 million. It partnered with the hospitality chain Ace Hotel to convert the property into a 200-room micro-hotel under Ace’s Sister City brand.
In 2019, Omnia borrowed the $68 million from Bank Hapoalim, with the option to upsize the loan to $80 million.
But Covid quickly put a damper on Omnia’s plans. The hotel closed, then reopened as a homeless shelter for about a year, billing the city a nightly fee of $110 per room. That ended in the summer of 2021, when Omnia rebranded the hotel and began listing rooms on Airbnb.
Ace claimed it was never consulted over the hotel’s transition to a homeless shelter and argued that the Airbnb listings violated its management agreement.
The hotel chain took the dispute to an arbitrator, who awarded it a $10.4 million judgment last year and ordered the hotel’s owners to stop using the Ace brand. Ace later sued to enforce the judgment.
Northwind, founded by Ran Eliasaf, had its own problems with Omnia. Northwind, an equity partner in the hotel, sued Omnia last year, accusing Paz of taking money out of the hotel to pay himself, his companies and even his sister.
Paz and his company “improperly extracted preferred equity distributions from the asset, starving it of the cash required to pay its debt service,” Northwind claimed in the lawsuit, which sought to have a receiver appointed to control the hotel.
For its part, Paz blamed Northwind, arguing in a court filing that Eliasaf and his firm sabotaged the project by instigating the bank to foreclose on the property.
“My alliance with Northwind was a colossal mistake, the size and scope of which I am only now unraveling,” Paz said in the filing.
A judge denied Northwind’s request for a receiver. The bankruptcy case is ongoing.
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