UPDATED, 5:29 p.m., Feb. 2: Making a rare foray into the mortgage world, Aby Rosen and Michael Fuchs’ RFR Holding acquired a $60 million mezzanine loan for the historic Mark Hotel on the Upper East Side, as well as a townhouse that is home to chic Italian eatery Sant Ambroeus.
The borrower on the loan is the Alexico Group, which owns the properties at 25 East 77th Street – also known as 992-998 Madison Avenue – and 1000 Madison Avenue. Alexico, a Midtown East-based firm which is developing residential condominiums at 56 Leonard Street, revamped the Mark into a five-star hotel with 150 hotel rooms and 10 co-op units in 2009. The four-story, 8,100-square-foot townhouse next door has four rental apartments. Alexico received the loan from an unidentified lender in early 2015, sources said.
RFR is an unlikely candidate to hold the loan — the firm specializes in investments, development and property management, and rarely does lending deals. Sources told TRD that RFR is now looking to expand its mortgage platform.
A spokesperson for RFR said the firm is “selectively lending on high-quality assets in markets where it is already a property owner.” Mark Weiss, who heads capital markets at RFR, said this acquisition serves as “a way to secure significant yield.”
RFR bought the mezzanine loan from an unidentified firm at par value, sources said.
A JLL team led by Dustin Stolly and Jeffrey Davis brokered the mortgage sale.
RFR “was presented with the opportunity to purchase a portion of the debt capital stack with significant duration, which is difficult to replicate in today’s market,” Davis said.
If the hotel were to fall into foreclosure in the future, RFR would have the chance to swoop in and take control.
Alexico hit a roadblock while carrying out a $200 million makeover of the 15-story property in 2010, when amid sluggish residential sales, it was forced to scale back its plan to convert 42 hotel rooms into co-ops.
After the Irish government forced the now-defunct Anglo Irish Bank to liquidate its assets in 2011, Dune Real Estate Partners acquired and restructured a loan Alexico took out on the property. Dune beat out Barry Sternlicht’s Starwood Capital Group and other contenders in the process.
The property eventually regained its footing. In 2012, Alexico secured a $160 million loan on the leasehold interest for the two properties from Deutsche Bank.
The Mark, constructed in 1927 as the Hyde Park Hotel, has a 12,000-square-foot duplex penthouse hotel room with a large rooftop terrace and three elevators that costs $75,000 per night, making it the priciest hotel room in New York City. It has also been on the sales market for $60 million since 2008, though it was taken off the market in 2015, sources said.
The hotel was recently named the 16th best hotel in New York by U.S. News & World Report.
Source: The Real Deal