Former Ritz-Carlton In Lower Manhattan Placed In Bankruptcy, Nears Deal With New Operator
An entity controlled by Urban Commons filed for a Chapter 11 restructuring in the Southern District of New York Tuesday, The Real Deal reports. The filing discloses $22.9M in claims against the property, a total of $167M in liabilities and a property value of $180M.
Urban Commons said it faces a $13.7M claim from the property’s landowner, the Battery Park City Authority, and $5M in bonds against the property from Tokyo-based infrastructure company Ichigo.
The Wagner was operated as the Ritz-Carlton Battery Park City hotel until it was rebranded in 2018. The 38-story hotel closed in 2020 during the pandemic and hasn't reopened.
But in its affidavit, Urban Commons principal Taylor Woods disclosed that the hotel has been in negotiations with "a potential new five-star operator" offering a triple-net lease in exchange for $8.5M in annual rents, as well as with "a potential purchaser, subject to the subletting of the Hotel by the Debtors to a new five-star operator."
Earlier this week, LuxUrban Hotels — a newly public hotelier that has racked up complaints from customers and employees over payment disputes — said on an investor call that it had acquired the former Ritz-Carlton in Battery Park City. LuxUrban didn't respond to Bisnow’s request for comment before publication.
The Wagner had been struggling long before Urban Commons took over as its operator, but Woods and Howard Wu, the firm's other principal, have struggled to turn around the hotel's fortunes. Woods wrote in an affidavit that the Battery Park City Authority and its former head, George Tsunis, are to blame for the Wagner Hotel’s insolvency.
Urban Commons acquired the building from a joint venture of Millennium Partners and Westbrook Partners in 2018 for $151M, Woods wrote in the affidavit, with a $96M mortgage from Westbrook.
Urban Commons' business plan was to convert the property from the unaffiliated Wagner brand to a Luxury Collection by Marriott hotel after losing the Ritz-Carlton branding, according to the affidavit. But even after securing Tsunis' support, Urban Commons didn't win over the board of the Ritz-Carlton condominium residences upstairs or win final approval from the BPCA.
Urban Commons claims that the failure to sign off on the repositioning before the pandemic prevented it from achieving its repositioning plan and fulfilling its debt obligations.
Less than two weeks ago, the property’s primary lender — BPC Lender LLC, an affiliate of investment firm Silver Creek Development — sued to force a sale on the property. BPC’s suit claimed the Wagner's owners have been in default since last April, having missed a payment deadline in December 2020.
BPC also names Woods and Wu as defendants. Wu personally filed for Chapter 7 bankruptcy last December. Woods responded to the lawsuit saying he “has no intention of ever giving up the property,” according to TRD.
Urban Commons was also sued by hotel management firm Highgate in April for claims that it failed to cover more than half of the $42M of expenses on the property. It also lists claims against it by the New York Hotel and Motel Trades Council and Con Edison.