As TheRealDeal.com reported in January, Deutsche Bank has filed suit against a joint venture between Sochin Downtown Realty and Morgans Hotel Group to foreclose on loans backed by the Mondrian Soho, which opened at 9 Crosby St in New York in February 2011 and has 263 guest rooms, a restaurant, bar and other facilities.
As of December 31, 2012, the Mondrian SoHo JV’s outstanding mortgage debt secured by the hotel was $196.0 million, excluding $21.7 million of deferred interest. The loan matured on November 15, 2012.
The foreclosure proceedings are seeking, among other things, the ability to sell the property free and clear of Morgans Hotel Group’s management agreement.
The management contract is a 10-year agreement to operate the hotel with two 10-year extension options.
Morgans Group owns a 20% equity interest in the joint venture that owns the Mondrian SoHo. Despite this, the ownership group has given notice purporting to terminate the Company’s subsidiary as manager of the hotel. It also filed a lawsuit against the Company seeking termination of the management agreement.
Morgans Hotel Group said in its Annual Report that it intends to vigorously defend its rights to continue managing the property under the Company’s management agreement and related agreements, but the Company cannot provide assurance that it will be successful in this pursuit.