Lower Manhattan’s Trump Soho hotel-condominium tower, which has struggled to find buyers since sales started in 2007, is facing foreclosure.
CIM Group, a Los Angeles-based investment firm that holds a loan on the property, is planning to take control of the building and has hired brokerage Eastdil Secured LLC to handle the auction of the remaining condos, according to a person with knowledge of the matter, who asked not to be named because the details aren’t public.
Developed by the Sapir Organization and Bayrock Group LLC, the 46-story tower houses condos that may only be used by their owners for 120 days of a calendar year. For the rest of the time, they’re offered as hotel rooms, with owners sharing in the rental revenue. Donald Trump’s Trump Organization manages the hotel and licenses its name to the property, and has no equity stake in the tower.
The 391-unit Trump Soho has recorded about 122 completed deals, according to appraiser Miller Samuel Inc. Fifty-eight units are currently listed for sale, with prices ranging between $915,000 for a studio to $50 million for a 10,000-square-foot (930-square-meter) presidential suite, according to property- listings website Streeteasy.com
“The challenge of this building is a very high price per square foot paired with extremely high carrying charges related to the hotel services they were trying to market,” said Jonathan Miller, president of Miller Samuel.
A 422-square-foot unit for sale on the 31st floor for $1.53 million, for example, has monthly common charges of $3,505, or about $8 per square foot. That amounts to a fee that is more than four times the Manhattan-wide average for a condominium, Miller said.
“This is essentially a hotel with hotel-like services, in a market with large residential lofts,” said Miller, a Bloomberg View contributor. “It didn’t seem to get traction.”
CIM offered new financing to the property in 2010, helping Sapir and Bayrock pay down $100 million of debt on the building owed to iStar Financial Inc. The existing mortgage at the time stood at $295 million.
CIM declined to comment on the planned sale, which was reported earlier today by the Wall Street Journal. Alex Sapir, president of the Sapir Organization, said in an e-mailed statement that the “current structure” of the property “does not make economic sense for ownership” and that his firm may someday seek to repurchase the hotel.
“I would like to thank my dear friend Mr. Donald Trump and the Trump Organization, who were valuable partners and provided excellent management services to the hotel, both during and after the Great Recession,” Sapir said in the statement.
Trump Organization will continue to manage the hotel, according to Alan Garten, the company’s general counsel.
“It’s a hot spot and prime destination for celebrities and jet-setters,” he said.
Eastdil Secured’s Douglas Harmon and Adam Spies are handling the foreclosure sale.
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