Alex Sapir’s Sapir Corporation is in hot water after blowing a major deadline related to the Nomo Soho hotel, the latest development in the property’s debt saga.
Sapir failed to make a $3 million payment on July 1 that was supposed to buy him more time with Israeli bondholders, according to a report filed with the Tel Aviv Stock Exchange.
Last year, Sapir requested to push back an outstanding $34 million debt on the 264-key hotel at 9 Crosby Street in exchange for a $6 million partial payoff and an increased interest rate. A $3 million payment came due July 1, according to the filing. But the funds never arrived.
Now the deal is on life support.
The bond trustee says Sapir is in default and is calling for bondholders to vote August 7 on whether to demand immediate repayment. If they vote yes, the trustee could start scooping up revenue directly from the hotel.
Sapir did not immediately respond to a request for comment.
Sapir and his partner Gerard Guez bought the hotel from Deutsche Bank at a foreclosure sale in 2015 for $208 million. Sapir later bought Guez’s 49 percent stake in the property, giving him 99 percent ownership.
In 2019, Goldman Sachs provided a $115 million refinancing for the hotel, which partly refinanced a $180 million senior loan from Credit Suisse. In 2022, Sapir refinanced again with an $89 million loan from the Israeli bond market.
Like most hotels, the property ran into trouble during Covid, with the occupancy rate dropping to 1.9 percent in April 2020. Broader issues plaguing commercial real estate, namely higher interest rates, later lowered the hotel’s valuation to $179 million.
The development firm put the property on the market last year to pay off the debt held by bondholders, but the hotel has not yet found a buyer. In February, the Sapir Corporation agreed to replace the property’s management company, cutting the management fees it pays in half.
Sapir Corp is one arm of Alex Sapir’s real estate companies. The only remaining properties in Sapir Corp are the Soho hotel and an undeveloped property in Miami near Wynwood, which the firm and its partners are re-listing for $41 million.
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