Lenders Seek Foreclosure On Battery Park City Hotel
The lenders backing the shuttered Wagner Hotel in Battery Park City have sued for foreclosure after owners allegedly failed to pay off a $96M loan.
The 38-story hotel’s loan has been in default since 2020, but last week, the property’s primary lender, an affiliate of investment firm Silver Creek Development, sued to force a sale of the property, Crain's New York Business reports.
BPC Lender LLC filed suit Thursday, claiming that the companies that own the hotel, which are controlled by Urban Commons, have been in default since April 2021 after having missed a payment deadline in December 2020. Urban Commons purchased the Wagner for $147M in 2018, and its affiliates are named as defendants alongside the firm’s principals, Howard Wu and Taylor Woods, and hotel investors.
Wu personally filed for Chapter 7 bankruptcy in December, The Real Deal reported. The Wagner, which had previously carried the Ritz-Carlton flag, has been closed since April 2020 and has yet to reopen.
The hotel lost approximately $75M in value between 2018 and spring 2022, court filings allege, and the luxury operator’s departure also impacted the values of the 115 top-floor residential condo units, which have reportedly lost around $2M in value over the last year.
The hotel has faced difficulties since before its planned opening in October 2001. The Sept. 11 attacks on the neighboring World Trade Center delayed its ribbon cutting, and once it did open, Urban Commons claims that the Ritz was losing $6M per year. The property was marketed at $200M before Urban Commons purchased it at a 26.5% discount.
Urban Commons unsuccessfully sued Battery Park City Authority in May this year, after the neighborhood's governing body tried to replace the operator. In response, Urban Commons alleged in the suit that its troubles were the result of the ownership structure in the neighborhood, where the operator essentially rents land from the state and faces strict regulation, Crain's reported.
Hotels in New York City are struggling, despite the near-full return of tourists. The city’s relative oversupply, combined with high operating costs, is putting pressure on hotels with loans coming due, Bisnow reported earlier this year. Hotels in Midtown and the Financial District have been hit particularly hard, while those in more entertainment-focused neighborhoods like Soho, Tribeca and Greenwich Village have recovered faster.