By:  Hadassa Kalatizadeh

The Times Square Margaritaville resort says it is in the midst of negotiations to secure a much needed $170 million loan.

As reported by Crain’s NY, the hotel is negotiating a loan with Cirrus REP Funding, a real estate investment firm with offices in Midtown and Florida. While the terms and conditions have not yet been set, the loan would last for one year with an option for a three-month extension.  Hotel owner Soho Properties would use the funds to refinance the hotel’s senior mortgage and pay off its other debts, as per a court filing.  The loan was noted in an Aug. 12th Chapter 11 bankruptcy protection filing by the hotel owner filed in federal bankruptcy court for the Southern District of New York.

Last month, the hotel owner, which is a limited liability company, had filed for Chapter 11 bankruptcy protection to prevent a foreclosure auction scheduled for July 10th.   Per Crain’s, the troubled hotel has an outstanding $57 million loan on the property from the Arden Group, which has accrued millions of dollars worth of interest.  Creditor Corten Real Estate Partners has also been pursuing foreclosure action. Margaritaville Resort Times Square has between one and 49 creditors, for total assets and liabilities estimated at between $100 million to $500 million, per a court filing.

The island-inspired resort, centrally located at 560 Seventh Ave on 40th street, was first opened in 2021, which was a very difficult year even for established hotels.  Recently, however, business is improving, with the daily occupancy rate at 97% in July.  The monthly operating revenues for May, June and July have been between about $2.7 million and $2.8 million, and revenues are slated to reach $25 million by the end of 2024, based on expectations that more of the vacant retail spaces will be leased out by then, the filing states.  “Given the projections for future income, the appraised value of the hotel and the solid location in Times Square, where tourism is reviving, the Debtor believes that a refinancing of the hotel can ultimately be achieved within a reasonable period of time,” read a previous court filing.  “The hotel’s financial issues have nothing to do with Margaritaville and were caused by adverse market conditions over the last two years,” said a court filing.

The hotel boasts 234 guest rooms and suites, five original restaurant and bar concepts, a terrace, a fitness center and a year-round heated pool.  The 4-star hotel offers room service, concierge service and private parking.  The property also includes roughly 34,000 square feet of retail space.   It isappraised for a value between $266 million and $350 million, as per a May appraisal quoted in the bankruptcy filing.  Soho Properties was founded by Sharif El-Gamal, who purchased the site for $62 million in 2014.  He told Crain’s that he spent $400 million to develop the Jimmy Buffett-themed hotel.

A representative for Soho Properties declined Crain’s request for comment on the new loan deal, and Cirrus did not immediately comment.