$180M pre-foreclosure filing on Chetrit’s Empire Hotel; $9M on Magnum walkup

LNR Partners, representing bondholders, filed to foreclose on a $180 million loan provided to the Chetrit Group and others secured by the Empire Hotel, and Starwood Property Trust filed to foreclose on a $9.2 million loan given to Magnum Real Estate Group, for walkup property.

Court filings represent the positions of one party and are not necessarily accurate or complete. The borrowers in these actions have not responded to the complaints. PincusCo could not verify the accuracy of the filings.

In the larger, LNR as special servicer filed a lawsuit on Friday, March 4, 2022, claiming the loan secured by the Empire Hotel at 44 West 63rd Street or 1889 Broadway, with an original principal of $180 million was in default. LNR sent a notice dated October 7, 2021, alleging the loan was in default. Chetrit Group bought the hotel from Ian Schrager and NorthStar Capital for $78.3 million in 2004, according to city records and news reports.

According to the complaint, “By letter dated October 7, 2021, Lender accelerated the Loan and demanded payment of all sums due thereunder. A copy of the October 7, 2021 letter is attached hereto as Exhibit J… To further secure repayment of the Note, Stuart Podolsky, Sharon Olson, Jay Podolsky, Shirley Reinfeld and Meyer Chetrit (collectively, “Guarantors”) executed and delivered to Original Lender a Limited Recourse Guaranty dated as of January 4, 2013.”

The 14-story building has 217,283 square feet and 403 hotel and retail units. Fitch reported in June 2021 that the loan was challenged. 
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In the second suit, Starwood Property Trust filed a suit seeking foreclosure on a loan with an original principal of $9.2 million. Ben Shaoul’s Magnum Real Estate Group bought the 7,830-square-foot, four-story walkup with 3 residential units in 2006 for $8.25 million, with the debt rising to $10 million in 2007, then decreasing to $9.2 million in 2016. That loan was bundled into the Citigroup Commercial Mortgage Trust 2016-P5, which on October 16, 2021, sold the loan the Starwood. According to the complaint, “Shaoul is named as a party defendant to adjudicate any deficiency under the subject note and mortgage for which he may be liable as a guarantor of the loan.”
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