The Hilton Garden Inn at 237 W. 54th St. is at risk of default.
The hotel’s $175 million mortgage was sent last month to special servicing, where troubled loans get worked out, according to a report from credit-rating agency KBRA. The Garden Inn is current on payments, but its 10-year mortgage comes due this month and there are concerns about refinancing the loan that carries a 4% interest rate. The hotel also carries $25 million in mezzanine debt.
A call to the hotel’s majority owner, Moinian Group, wasn’t immediately returned and nor were two emails and a call to its public relations firm. Moinian Group is one of the nation’s largest developers, with a portfolio of more than 20 million square feet of space, according to its website. Holdings include 3 Columbus Circle and 535 Fifth Ave.
Moinian developed the 34-story, 401-room Hilton Garden Inn with Starwood Capital Group Global at a cost of $131.5 million about 12 years ago. Its architect, Gene Kaufman, has designed nearly 60 New York hotels and it was built on the site of the Hit Factory, a famous recording studio used by Michael Jackson, Madonna and Bruce Springsteen. Upon opening in 2014 it was the largest Hilton Garden Inn in the country. Soon after opening, Starwood sold its 49.9% share to Morad Ghadamian, a real estate investor and carpet importer.
The Garden Inn’s mortgage was first transferred to special servicing in 2020 after tourism shut down for Covid-19, but in 2022 the hotel brought all payments current. Its occupancy rate was 91% last March and the hotel was producing ample cash to pay the mortgage and other obligations, KBRA said. However, the ratings firm estimated the hotel’s value had fallen to about $120 million from a pre-pandemic $150 million, which could mean lenders will require Moinian to pony up more cash to refinance the expiring mortgage.
The Hilton Garden Inn also has a lot more competition than when it opened. Since 2014 the number of hotel rooms in New York has jumped by nearly a third, to 136,000, according to city data. Another 14 new or renovated hotels are expected to open this year, according to PwC, and introduce another 3,200 rooms to the market.
In general, New York hotels are thriving and average rates exceeded $400 a night in December. Average occupancy in Manhattan hotels was 89.4% last quarter, PwC said, marking a return to pre-pandemic levels.
