Commercial Real Estate
New York

Lender seeks foreclosure on Standard High Line, alleging $187M owed

Claiming 18 months of missed payments, Wells Fargo moves to wipe out Gaw Capital’s interest in Meatpacking hotel

The Standard High Line Hotel and Goodwin Gaw (GawCapital, TripAdvisor)

The Standard High Line Hotel and Goodwin Gaw (GawCapital, TripAdvisor)

UPDATED Nov. 8, 2021, 1:00 p.m.: After a year and a half of missed loan payments, the Standard High Line could be headed to foreclosure.

Wells Fargo is suing an affiliate of owner Gaw Capital on behalf of CMBS bond holders, seeking a judgment of foreclosure and sale on the private equity firm’s interest in the 338-key hotel at 848 Washington Street in the Meatpacking District.

The lawsuit, filed Monday in federal court, alleges that Gaw owes its lenders nearly $187 million.

After acquiring the hotel for a reported $340 million in 2017, Gaw Capital secured a 10-year, $170 million acquisition loan from French investment bank Natixis. That loan was later split into ​​four separate promissory notes, according to the suit.

Gaw was set to pay off the loan beginning in December 2017 and continuing through October 2027. However, from May 2020 through October of this year, Gaw failed to make any payments, the lawsuit alleges.

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Gaw received a notice of default in June 2020, but still failed to pay, according to the suit. A year later, the lenders notified Gaw that the entire outstanding principal balance of the loan, along with all accrued interest and late charges, had been declared immediately due under the agreement’s acceleration clause.

The Standard High Line was one of 8,100 hotel businesses across the country that received federal coronavirus assistance of $150,000 or more through the Paycheck Protection Program in July 2020.

The four-star hotel was developed in 2009 by hotelier Andre Balazs in partnership with Dune Real Estate Partners and Greenfield Partners. It was quietly placed on and off the market in 2017 before it was bought by Gaw.

Based in Hong Kong, Gaw Capital is run by Goodwin Gaw. The private equity fund manages more than $27 billion in global property investments, according to Forbes.

In a statement Friday, Gaw Capital disputed the lawsuit’s claims of missed payments and accused Apollo Global Management, which it says owns 18 percent of the loan, of refusing to engage in “good faith negotiations.”

“The controlling note holder, Apollo Global Management and its affiliates… have demonstrated that they are more interested in putting their financial greed above interests of all involved including the bondholders,” said Kai Speth, a management consultant at Gaw Capital Hospitality.

“Many” of the alleged missed payments, Speth claimed, have in fact been sitting in lender-controlled accounts while Apollo has declined to entertain settlement offers “at market terms.”

“Apollo Global Management and its affiliates are seeking to create value for themselves at the expense of a complete make-whole settlement made by the borrower for the loan’s bondholders, destroying value for the bondholders, and adversely affecting the property, hotel employees and the community,” Speth said.

This article has been updated to include a statement from Gaw Capital.

COMPANIES AND PEOPLE

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Commercial Real Estate
New York

Lender seeks foreclosure on Standard High Line, alleging $187M owed

Claiming 18 months of missed payments, Wells Fargo moves to wipe out Gaw Capital’s interest in Meatpacking hotel

The Standard High Line Hotel and Goodwin Gaw (GawCapital, TripAdvisor)

The Standard High Line Hotel and Goodwin Gaw (GawCapital, TripAdvisor)

UPDATED Nov. 8, 2021, 1:00 p.m.: After a year and a half of missed loan payments, the Standard High Line could be headed to foreclosure.

Wells Fargo is suing an affiliate of owner Gaw Capital on behalf of CMBS bond holders, seeking a judgment of foreclosure and sale on the private equity firm’s interest in the 338-key hotel at 848 Washington Street in the Meatpacking District.

The lawsuit, filed Monday in federal court, alleges that Gaw owes its lenders nearly $187 million.

After acquiring the hotel for a reported $340 million in 2017, Gaw Capital secured a 10-year, $170 million acquisition loan from French investment bank Natixis. That loan was later split into ​​four separate promissory notes, according to the suit.

Gaw was set to pay off the loan beginning in December 2017 and continuing through October 2027. However, from May 2020 through October of this year, Gaw failed to make any payments, the lawsuit alleges.

Read more

Gaw received a notice of default in June 2020, but still failed to pay, according to the suit. A year later, the lenders notified Gaw that the entire outstanding principal balance of the loan, along with all accrued interest and late charges, had been declared immediately due under the agreement’s acceleration clause.

The Standard High Line was one of 8,100 hotel businesses across the country that received federal coronavirus assistance of $150,000 or more through the Paycheck Protection Program in July 2020.

The four-star hotel was developed in 2009 by hotelier Andre Balazs in partnership with Dune Real Estate Partners and Greenfield Partners. It was quietly placed on and off the market in 2017 before it was bought by Gaw.

Based in Hong Kong, Gaw Capital is run by Goodwin Gaw. The private equity fund manages more than $27 billion in global property investments, according to Forbes.

In a statement Friday, Gaw Capital disputed the lawsuit’s claims of missed payments and accused Apollo Global Management, which it says owns 18 percent of the loan, of refusing to engage in “good faith negotiations.”

“The controlling note holder, Apollo Global Management and its affiliates… have demonstrated that they are more interested in putting their financial greed above interests of all involved including the bondholders,” said Kai Speth, a management consultant at Gaw Capital Hospitality.

“Many” of the alleged missed payments, Speth claimed, have in fact been sitting in lender-controlled accounts while Apollo has declined to entertain settlement offers “at market terms.”

“Apollo Global Management and its affiliates are seeking to create value for themselves at the expense of a complete make-whole settlement made by the borrower for the loan’s bondholders, destroying value for the bondholders, and adversely affecting the property, hotel employees and the community,” Speth said.

This article has been updated to include a statement from Gaw Capital.

COMPANIES AND PEOPLE

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