Hidrock Properties is taking a bath on a Financial District site where it had planned to build a 30-story hotel.
It sold the parcel at 112 Liberty Street to Queens developer Hiwin Group USA late last month for just under $22 million, records show — 44 percent below what Hidrock paid for the site six years ago.
A regulatory hurdle that New York City imposed in 2021 on hotel development may be to blame.
The City Council and de Blasio administration required that new hotel proposals pass through the lengthy, expensive land-use review process, even where permitted by zoning — a law that has frozen hospitality construction.
Although hotel projects filed before the 2021 regulation were exempted, a six-year time limit to finish such “vested” development proposals was also implemented.
Having filed plans in March 2019 to build the hotel, Hidrock had just one year left to complete the project — a practical impossibility with no foundation in place.
Meanwhile, monthly debt service payments ate away at Hidrock’s equity in the site. As of 2021, it owed $23.5 million to lender Emerald Creek Capital at the property, meaning the sale may have completely erased Hidrock’s investment.
Hidrock did not immediately return a request for comment. Hiwin CEO Anthony Hu declined to comment. The sale was previously posted on Traded.
A year ago, Hidrock lost another site in Lower Manhattan where it had planned a hotel, at 140 Fulton Street, after Israel’s Bank Hapoalim took it to court for not paying the mortgage. Hidrock is appealing the decision.
Land values in New York have yet to recover from the pandemic, remaining between one-quarter and one-third below their pre-Covid value, according to experts.
Besides limitations on new hotel construction, land prices remained tempered by a diminished office market and the expiration of 421a, a multifamily development tax break.
That leaves developers to construct condos — an attractive proposition to Hiwin Group.
The company quickly sold out its first condominium, a 69-unit offering at 300 West 30th Street. It recently bought two parcels near Penn Station with plans to build condos, Crain’s reported.
The company might pursue another condo project on its new Financial District territory. At the moment, there is little else that can be done with it, although state lawmakers are in talks to replace 421a.
Kathryn Brenzel contributed reporting.
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