The first in what’s expected to be a wave of pandemic-battered CMBS (commercial mortgage-backed securities) hotel loans in the city sent to special servicing is at the Hotel at Times Square, according to CMBS market monitor Trepp.
Borrowers for the 260-room boutique property at 59 W. 46th St. “requested a 90-day forbearance due to the COVID-19,” reports Trepp. The $34.8 million loan matures in May 2023. The borrowers of record are Wentworth Hotel LLC and Wented Realty Corp.
A number of larger Big Apple hotels were under debt strain even before the virus struck — largely due to overleveraging while overproduction of new rooms was pushing down revenue.
But the Hotel at Times Square is the first CMBS borrower to need special servicing specifically because of the coronavirus outbreak.
“Travel has been shut down due to the COVID-19 and the collateral property has been hit hard,” according to special servicer Key Corp.
Trepp Managing Director Manus Clancy said the West 46th Street property was “a struggler to begin with,” but its plea for a 90-day extension “is of a piece with the wider situation. Everybody’s trying to get their arms around it nationwide.
“How many hotel owners aren’t going to be able to make payments? Ten percent? Thirty percent? Everybody’s holding their breaths.”
Clancy said the Hotel at Times Square “is one of many dozens in every market that will go down this path. I owe X millions of dollars and I have no income. I need time.
“It wouldn’t shock me if we have five or 10 more this week,” he said.
Trepp is closely watching whether borrowers are making April payments on nearly $856 million in total CMBS loans at properties including the Soho-Tribeca Grand portfolio, Courtyard Midtown East, Hilton Times Square, Hilton Garden Inn on West 54th Street, Westin Times Square, the Standard High Line and a seven-property portfolio that includes Holiday Inns on Wall Street and in Times Square.
Clancy said payments totaling about $250 million have been made for April at the Refinery, The Mark and a Holiday Inn on Sixth Avenue.
Cushman & Wakefield hospitality industry specialist Tom McConnell explained that CMBS loan trustees have less leeway than balance-sheet lenders, and that when CMBS borrowers ask for postponements, it automatically triggers special servicing.
Howard Hughes Corp. is helping to keep the Seaport District’s nonprofit Fulton Stall Market open during the crisis — and also keeping the market’s owners, who are in their 70s, safe.
HHC is providing emergency financial support for six weeks with an option for six weeks more, so the indoor-and-outdoor market at 91 South St., which has been at the location since 2017, can continue to sell fresh food products from 100 area farms and purveyors during the outbreak.
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