Standard hotel could face foreclosure
Photo: Andrew Lichtenstein / Corbis via Getty Images
Even during a pandemic, the Standard Hotel has remained one of the most popular party spots in town: you may recall that Madonna’s pride party in the Boom Boom room was so crowded that people ended up peeing in cups because they couldn’t get to the toilet. But despite the nightly crowds, the Standard faces foreclosure.
The 338-room hotel founded by André Balazs was bought in 2017 by Gaw Capital, a Hong Kong-based private equity firm run by Goodwin gaw. Gaw bought the Standard for $ 340 million, $ 60 million less than he had been under contract a few years before, and withdrew a $ 170 million acquisition loan from Natixis, a French investment bank that was bullish on hotels at a time when other lenders were pulling out. “New York’s hospitality industry is a bit out of favor right now,” Gaw says Forbes at the time. But over the past year and a half, the hospitality industry has fallen more than slightly out of favor, with a global pandemic and travel bans making Airbnb and market oversaturation relatively minor problems. In June this year, the Standard was getting decent traffic on weekends, but “remains slow during the work week, when business travelers usually take over.” according to a Bloomberg item.
Gaw stopped paying his mortgage on the hotel in May 2020 and now owes $ 187 million, according to a lawsuit in federal court by Wells Fargo, which is suing on behalf of the bondholders (the loan was split into four separate promissory notes). Gaw’s loan agreement also an acceleration clause, according to the Real Deal, which meant that one year after Gaw defaulted, the entire outstanding principal balance of the loan, along with all accrued interest and late fees, was immediately due.
The standard received a paycheck protection loan earlier in the pandemic and it seems likely that, like all New York hotels, it will continue to struggle for some time (New York hotel bookings were only 60% in June). Still, it would be surprising if Gaw Capital moved away from Standard. Gaw Has More Than Enough Capital – Forbes Puts The Net Of The Gaw Family worth $ 1.6 billion – and Standard is a trophy property. Gaw is also a seasoned hotelier who transformed the Hollywood Roosevelt Hotel, Los Angeles, and successfully managed it for decades. Goodwin Gaw bought the historic LA hotel from bankruptcy for $ 9.5 million in 1995 and turned it into the kind of place Kirsten Dunst and Lindsay Lohan partied and once famous Courtney Love. left on a stretcher after a night out. Still, the Standard may not be the easiest place to run right now. In addition to the empty rooms, the building itself appears to be in distress: in January, 8 foot piece of cement and fiberglass fell from the facade.