The drama surrounding New York City’s Margaritaville Resort Times Square hotel has turned a new chapter as a hotel lender has won a foreclosure auction for the property.
Real estate investment firm Arden Group on Monday submitted a $1,000 credit bid, without any competing bids, and won the foreclosure auction, attended by about 15 and hosted both via Zoom and in person at a law firm’s office at the MetLife Building in midtown Manhattan, auctioneer Matthew Mannion told CoStar News.
A credit bid in an auction is where a secured creditor bids on the collateral that secures its loan using the amount of the loan as the bid price. This means the creditor is not actually paying any cash for the collateral but rather is using the debt owed to them as payment. The lender could bid up to the full amount it’s owed.
Arden declined to comment to CoStar News. SoHo Properties, the developer of the property located at 560 Seventh Ave., didn’t respond to a CoStar News request seeking comment.
SoHo filed for Chapter 11 bankruptcy protection in July in a move aimed at preventing the planned foreclosure auction on the high-profile property. Arden and another lender then followed with suing the property’s developer and other guarantors to hold them personally liable. A judge ended up giving the OK for the auction to proceed.
Arden’s involvement with the property came after it lent $57 million to SoHo in September 2021 before selling half of its interest in the debt to another party in July 2022, according to SoHo’s bankruptcy filing. Arden has said in its lawsuit that SoHo defaulted on its loan in March.
SoHo said in its bankruptcy filing that “challenging market conditions arising in connection with the COVID-19 pandemic” led to “operating shortfalls during its stabilization period” since the hotel opened in 2021.
The 32-story, $370 million hotel features what it bills as the only year-round outdoor heated pool in Times Square, a 32-foot replica of the Statue of Liberty holding a margarita, and views of the iconic ball used in New Year’s Eve celebrations as well as the Manhattan skyline. It was a foray into the Northeast by the brand known for its island-inspired theme.
Margaritaville Holdings, the operator of hotels, restaurants and casinos named after musician Jimmy Buffett’s signature song, didn’t immediately respond to a request seeking comment. The firm said in July that SoHo’s Chapter 11 filing wouldn’t affect the hotel’s operations and that the business has continued to perform well.
Buffett died in September at age 76.
The Real Deal earlier reported the auction.