Dive Brief:
- Real estate developer Soho Properties lost its stake in Margaritaville Times Square Resort at a foreclosure auction to commercial real estate fund manager Arden Group, according to real estate news site The Real Deal.
- Philadelphia-based Arden Group originally provided Soho Properties with a $57 million mezzanine loan. The group made a credit bid of $1,000 to acquire an equity stake in the property, opening the door for control of the resort, The Real Deal reports, noting Arden was the only bidder at the auction.
- Despite the hotel’s apparent popularity, Soho Properties has struggled to finance the project, and entities owned by Soho Properties’ Chairman and CEO Sharif El-Gamal have filed for bankruptcy protection twice since the hotel’s opening.
Dive Insight:
Times Square has seen a flurry of hotel news in recent months — but not all of it has been good.
Soho Properties opened Margaritaville Times Square in 2021. A few months later, the developer closed on a $317 million refinancing of the hotel, which cost $400 million to develop, according to The Real Deal. Margaritaville Times Square’s owner Soho Properties has filed for two bankruptcies since then: one in July that protected it from foreclosure by Arden Group, and another in August that placed its fee owner entity under Chapter 11 protection.
That wasn’t enough to avoid foreclosure, however. Though Soho Properties argued Arden didn’t give bidders enough time to analyze the resort — and also that El-Gamal was close to another refinance — a New York state judge approved the foreclosure anyway, The Real Deal reports.
A representative for Arden declined to comment. Soho Properties did not immediately respond to a Hotel Dive request for comment.
The resort owner’s financial troubles, however, shouldn’t be mistaken for a lack of guests. In September, a Margaritaville Times Square employee told Hotel Dive that the property is “normally always sold out.”
Margaritaville is one of several hotel brands that has chosen to open in Times Square as the neighborhood experiences a surge in leisure traveler demand after a pandemic slump. Hilton, Marriott International and IHG Hotels & Resorts have all opened properties in the area this year.
