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Yellowstone Real Estate Investments has picked up another large Manhattan building in its bid to snap up properties in distress.
Issac Hera's firm foreclosed on the former Maxwell hotel at 541 Lexington Ave. last week with a $140.5M bid at an auction, according to court records that were first reported by PincusCo. Hera acquired the loan tied to the property from the original lender, LoanCore Capital, and a judge ruled that he was entitled to collect $233.6M from the borrowers.
The subjects of the foreclosure action were Dune Real Estate Partners and Aynsley Capital, which were named as guarantors when the hotel last traded hands.
Capstone Equities and Highgate Hotels bought the hotel in 2018 for $190M, backed by a $170M debt package from LoanCore. The lawsuit said Dune and Aynsley signed a guaranty of recourse obligations on that mortgage. Capstone and Highgate were not named as defendants.
The 697-room hotel was the first property in the trendy W Hotel chain before Capstone and Highgate bought it and rebranded it as the Maxwell. The owners permanently closed the Maxwell in April 2020.
Yellowstone bought the $170M loan from LoanCore in March 2022, backed by $90M of debt from Fortress Credit Corp., per PincusCo. It filed the foreclosure lawsuit six months later, claiming the borrowers didn't pay off the loan when it matured in 2021 and owed $182.4M at that time — default interest ballooned in the intervening 24 months to more than $233M, per court records.
Hera and officials with Dune didn't respond to Bisnow's request for comment. An Aynsley Capital representative couldn't be reached for comment.
Yellowstone has been one of the most active buyers of distressed properties in Manhattan. It paid $200M in April to acquire the loan on and take over 1740 Broadway, an office building that Blackstone bought for $605M in 2014. It also picked up the $106M loan tied to the New Yorker Hotel building in Hell's Kitchen.
Hera spoke earlier this month at Bisnow's New York Office and Workplace event about his pursuit of distressed assets.
“Stress creates opportunities for us because it puts pressure on their assets,” he said at the event. “The equity needs to act or is forced to act because of lenders. It impacts valuation and their ability to hold onto the asset.”
CORRECTION, OCT. 23, 9:25 A.M. ET: A previous version of this story misspelled Issac Hera's first name. This story has been updated.
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