Battery Park City Hotel Operator Implodes Amid Allegations of Loan Default, Fraud
Even by the standards of the distressed Lower Manhattan hotel industry, the spiraling adversity faced by the owners of the shuttered Wagner Hotel in Battery Park City is remarkable. On Thursday, the current owners of the hotel were sued by the company that sold them the property in 2018, which also provided a $96 million loan to enable the transaction. In a story first reported by Crain’s New York, Urban Commons (the current owners, who purchased the hotel for $147 million) is facing a court claim by Westbrook Partners (the former owners, who lent Urban Commons the $96 million) for defaulting on that loan.
This follows a raft of related litigation. In October, 2021, lenders and investors filed suit against Urban Commons, alleging that executives of the company accepted $1 million from an investor, which was intended to finance hotel acquisitions that never took place, and then refused to return the original funds.
These accusations echo those contained in a 2020 suit filed by two other investors, who alleged that Urban Commons executives promised them a 70 percent return on an investment of $750,000, which was earmarked for helping to bankroll the firm’s purchase of the Wagner Hotel. In the event, the investors claim never to have received profits or payments of any kind, and say that the firm broke off contact when they demanded their money back.
Also last October, the company was named by the New York State Department of Taxation and Finance as one of its largest business-tax delinquents, citing unpaid taxes of more than $392,000 related specifically to its operation of the Wagner Hotel.
In June, 2021, the city of Long Beach, California seized from Urban Commons the Queen Mary, the historic ocean liner permanently moored there, after the company failed to maintain and preserve the vessel (which is designated as a floating landmark) and operate it as a cultural and tourist destination, in compliance with a lease signed in 2016. An investigation by Long Beach’s auditor found that Urban Commons had “intentionally and explicitly misrepresented” its finances, after the municipal government had issued $23 million in bonds to help the firm upgrade the ship.
In May, 2021, the Fitch bond rating agency noted that the Wagner Hotel’s delinquency on ground rent and payments in lieu of taxes (both levies collected by the Battery Park City Authority from property owners) contributed to $3 million in arrears owed to the Authority.
The previous January, more than 20 Urban Commons subsidiaries and affiliates filed for bankruptcy in a series of proceedings related to unpaid taxes and other debts on 18 properties (chiefly hotels) located throughout the U.S.
All of these developments come on the heels of a 2020 legal action by condominium owners at the Ritz-Carlton residences (the apartment tower located above the Wagner Hotel), arguing that Urban Commons was in violation of multiple terms of its ground lease. These alleged violations included the requirement that the facility be branded to a world-class operator of premium hotels and resorts, that it be recognized as such by national ratings agencies, and that it be managed by a company that has a decade or more of experience overseeing at least five comparable hotels. Residents of the Ritz-Carlton condominium argue that the Wagner’s substandard operation detracts from their quality of life and diminishes the value of their homes.
Outlier on the Esplanade
Southern Battery Park City Shows Bump in COVID Test Results
Amid generally receding concerns about COVID-19, the southern section of Battery Park City had the fourth highest rate of infection in Manhattan during the one-week period between October 25 and 31, according to the City Department of Health data. Read more…
Ask and You Might Receive
Push for Seaport Community Center at Site of Demolished Waterfront Building
Community Board 1 (CB1) is reviving calls for a waterfront community center in South Street Seaport at the site of the New Market Building (which was demolished last fall). Read more…
Eyes to the Sky, November 7-11
Total Lunar Eclipse; Dark Sky Conference
It would be easy to sleep through the eclipse of the Full Frost Moon that begins before dawn on Election Day, Tuesday, November 8—and how easy to observe at least parts of the drama as the white orb fades to red-orange under Earth’s shadow. The progression from faintest beginning to total eclipse back to the fully visible moon transpires between 3:02am EST and 8:56am EST. In our locale, moonset on the 8th is 6:41am, coinciding with eclipse totality. To see the “blood moon” setting, prepare to be at a location with an unobstructed view to the west-northwest around 6am. Follow the attached diagram to choose your viewing times. Virtual opportunity HERE.
Join me November 11-12 at the Under One Sky conference, a virtual, 24-hour, worldwide event of the International Dark Sky Association (IDA). Led by experts and storytellers in the dark sky movement, discover resources to support the protection of the night: to save energy, save wildlife, safeguard human health, and see the stars. Admission is free, registration is required.
The history of the Sackler dynasty is rife with drama—baroque personal lives; bitter disputes over estates; fistfights in boardrooms; glittering art collections; Machiavellian courtroom maneuvers; and the calculated use of money to burnish reputations and crush the less powerful. Empire of Pain is the saga of three generations of this family and the mark they would leave on the world.
As the Chinese saying goes: a harmonious family prospers everything (家和万事兴). Do marriage and family still hold the foundational value for Chinese nowadays? Join in the conversation with two experts in this field. Free.