A Midtown hotel with a troubled operator has helped shove a Herald Square property to the brink of foreclosure.
The Herald, a 166-key hotel run by LuxUrban Hotels, allegedly hasn’t paid rent at 960 Sixth Avenue since last June, according to court filings. The arrears total at least $1.6 million through December and a judge approved the landlord’s eviction request this summer, Crain’s reported.
LuxUrban is fighting the order, claiming it never received certain documents, but the missed payments appear to have tightened the screws on claims against the property’s owners.
The landlord, a partnership led by Garment District investors Victor Tawil and Ely Cohen, was sued last week by lender Aareal Capital, which says a $60 million mortgage on the 18-story building has gone into default.
The owners failed to pay off the $55.2 million balance when the loan matured Aug. 15, a date that marked the fourth extension of the deadline since its original 2021 due date, according to the complaint. They also allegedly fell short on July’s $368,000 debt-service bill and didn’t maintain a reserve account to cover shortfalls.
None of the parties involved in the case commented to the outlet, though a lawyer representing LuxUrban said it was still operating its hotel at the property, where rooms go for a minimum of $270 a night.
The 1930-era building, also known as 8 Herald Square and 71 West 35th Street, has been through several uses since its debut, including fabric showrooms, a bank headquarters, a Marriott hotel that closed during the pandemic and even a stint as a coworking hub. The Monarch Rooftop bar, a Midtown nightlife staple for the last decade, still operates upstairs.
LuxUrban, whose issues range from a $1.2 million city fine over illegal Airbnb rentals to a Nasdaq delisting, has been accused of overstating its hotel holdings and is facing a shareholder class action lawsuit. Reviews of The Herald, which opened earlier this year, cite dirty conditions and poor service, further dimming its prospects.
Read more
New York City sues LuxUrban over bounced check
The Yard expands into now-defunct Herald Square hotel
Short-term rental company sued for $1.5M in unpaid rent
