Wilmington Trust, a trustee acting on bondholders’ behalf, has filed a foreclosure lawsuit in state court in NY stating that Maefield Development failed to repay a $750M loan for 20 Times Square.
The financing for the property was securitized in a single-borrower commercial mortgage bond. The loan’s maturity date was May 5, according to a report in TheRealDeal.
In 2018, Maefield and Fortress Investment Group took control of a project to develop a 42-story luxury hotel with retail space on the parcel at 701 Seventh Avenue; ground was broken in 2015.
The partners bought out the development’s other investors with loans provided by Natixis, a French bank, in deals that valued the high-rise development at $1.6B.
Natixis held $650M of the debt, with the leasehold serving as collateral, while the rest was securitized in one single-borrower CMBS, plus four conduit deals, TRD reported.
A Marriott-branded Edition hotel opened in the building in March 2019, only to shut down a year later because of the pandemic.
The partners also had trouble filling the retail space. A joint venture between the NFL and Cirque du Soleil took 50K SF but closed in less than a year.
According to PwC’s Q2 2023 Manhattan Lodging Index, the rate of growth in occupancy, average daily rate and revenue per available room (RevPAR) decelerated considerably in the second quarter, with “room rate fatigue” effecting growth in the higher-priced hotels.
H1 2023 RevPAR increased year-over-year by 23.6%, decelerating each month from a January high of 103.6% to a June low of 4.7%. Q1 2023 RevPAR increased 53.5% Y-O-Y; RevPAR in Q2 increased 11% in a year-over-year comparison.
“The rate of growth in occupancy, average daily rate and resultant RevPAR decelerated in each of the first six months of this year, due largely to increasingly difficult comps,” said Warren Marr, a PwC managing director, in the report.
“With return to office initiatives stagnating and resultant office vacancy rising, hotels reliant on the business transient guest are starting to see growth from that demand segment wane,” Marr said.
During Q2 2023, growth in occupancy at limited-service hotels outpaced that of full-service hotels, with Y-O-Y increases of 4.1% and 3.4%, respectively. RevPAR increased 16.6% for limited-service properties while full-service hotels saw an increase of 10.1% over the same period, according to PwC’s report.