MCR and Island Capital’s loan on the Sheraton Times Square Hotel has gone into forbearance as the owner nears a refinancing with Fortress Investment Group.
MCR and Andrew Farkas’ Island Capital bought the 1,780-key hotel in April 2022 for $373 million from Host Hotels & Resorts and secured a $250 million financing from the seller.
The loan matured on Oct. 18, but the owner and the lender entered into a forbearance agreement at the last minute, according to a filing with the Securities and Exchange Commission. The forbearance was set to expire on Nov. 8, but was extended until Monday, according to sources familiar with the matter.
The owners are closing in on a refinancing with the investment giant Fortress for a four-year $260 million loan, according to sources. The floating-rate loan will replace the existing financing.
JLL’s Kevin Davis and Mark Fisher are brokering the deal.
Opened in 1962, the 50-story hotel is one of the largest hotels in the city. The 1,780-key asset last sold in 2006 for $738 million. MCR’s acquisition was one of the lowest prices per guest room for any hotel deal in New York over the past decade, according to its website.
Island Capital and MCR planned to invest more than $100 million in the property at the time of the purchase.
As banks back away from providing loans, alternative lenders such as Fortress are seeking to fill the void.
Fortress has also been actively acquiring loans. It bought $1 billion of office loans from Capital One this summer.
MCR has become one of the more active buyers of hotels throughout the city. It acquired the Gramercy Park Hotel for $50 million this summer. It also owns the TW Hotel at JFK Airport, The New Yorker hotel and The High Line Hotel.