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A Los Angeles investment firm is in advanced talks to buy the debt for the Trump SoHo, the soaring 46-story condo-hotel, according to an article by Craig Karmin today wsj.com, "setting the stage for a possible battle for control of the high-profile project."
"CIM Group is close to a deal with the project's lender, iStar Financial, to buy debt with a face value of about $275 million, say people familiar with the matter,' the article said, adding that "it's not clear what price CIM is willing to pay, but it would likely be at a discount to the loan's face value because of the challenges the project is facing in selling condo units."
The negotiations to buy the loan come less than a year after the Trump SoHo opened in April. The project was developed by a venture between the Sapir Organization and Bayrock Group, both based in New York, and has a licensing and management agreement with the Trump Organization.
"Despite strong occupancy rates and cash flow at the hotel," the article said, "condo sales have to hit a certain level for the project to succeed financially. Trump SoHo, at Spring and Varick Streets, had closed on the sales of about 20 of its 391 units as of midsummer. To boost business, Trump SoHo in September brought in CalCon Mutual Mortgage, a San Diego lender to offer loans to potential buyers able to put down deposits of 40% to 50%. The developer also agreed around the same time to cut prices by as much as 25% for buyers who were in contract but had not yet closed. Representatives of the developer didn't respond to requests for comment. An iStar spokesman and a CIM spokesman declined to comment."
"If CIM buys the debt, the deal would mark that second high-profile Manhattan acquisition by the firm in 2010. In the first deal, it took control of one of the most prominent development sites in Manhattan, which had been the location of the Drake Hotel. CIM formed a partnership with Harry Macklowe, the financially troubled developer who had controlled the site. That partnership, in turn, paid off the debt holders who were threatening to foreclose," according to the article.
The talks with CIM have been going on for about a month and the two sides are hoping to reach an agreement in the next few days, according to people familiar with the matter, the article said.
The owners of Trump SoHo are offering disgruntled condo buyers in the building up to half their deposits back if they agree not to become part of a lawsuit alleging fraud, say people familiar with the matter, according to a November 17, 2010 article by Mr. Karmin in The Wall Street Journal.
The unusual offer applied only to buyers who have not closed their purchases in the 46-story hotel and condominium on Spring Street, the article said, adding that the suit, filed in August, alleged that representatives of Trump SoHo engaged in "fraudulent misrepresentations and deceptive sales practices" by inflating the number of purchases to attract more buyers.
"CIM Group is close to a deal with the project's lender, iStar Financial, to buy debt with a face value of about $275 million, say people familiar with the matter,' the article said, adding that "it's not clear what price CIM is willing to pay, but it would likely be at a discount to the loan's face value because of the challenges the project is facing in selling condo units."
The negotiations to buy the loan come less than a year after the Trump SoHo opened in April. The project was developed by a venture between the Sapir Organization and Bayrock Group, both based in New York, and has a licensing and management agreement with the Trump Organization.
"Despite strong occupancy rates and cash flow at the hotel," the article said, "condo sales have to hit a certain level for the project to succeed financially. Trump SoHo, at Spring and Varick Streets, had closed on the sales of about 20 of its 391 units as of midsummer. To boost business, Trump SoHo in September brought in CalCon Mutual Mortgage, a San Diego lender to offer loans to potential buyers able to put down deposits of 40% to 50%. The developer also agreed around the same time to cut prices by as much as 25% for buyers who were in contract but had not yet closed. Representatives of the developer didn't respond to requests for comment. An iStar spokesman and a CIM spokesman declined to comment."
"If CIM buys the debt, the deal would mark that second high-profile Manhattan acquisition by the firm in 2010. In the first deal, it took control of one of the most prominent development sites in Manhattan, which had been the location of the Drake Hotel. CIM formed a partnership with Harry Macklowe, the financially troubled developer who had controlled the site. That partnership, in turn, paid off the debt holders who were threatening to foreclose," according to the article.
The talks with CIM have been going on for about a month and the two sides are hoping to reach an agreement in the next few days, according to people familiar with the matter, the article said.
The owners of Trump SoHo are offering disgruntled condo buyers in the building up to half their deposits back if they agree not to become part of a lawsuit alleging fraud, say people familiar with the matter, according to a November 17, 2010 article by Mr. Karmin in The Wall Street Journal.
The unusual offer applied only to buyers who have not closed their purchases in the 46-story hotel and condominium on Spring Street, the article said, adding that the suit, filed in August, alleged that representatives of Trump SoHo engaged in "fraudulent misrepresentations and deceptive sales practices" by inflating the number of purchases to attract more buyers.
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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