July 20, 2017
The InterContinental New York Times Square is going to be fine… eventually. Don’t worry that the hotel has been operating at a loss, and a $188 million loan on the property has been sent to “special servicing.”
“We expect that workout negotiations could result in a modification… to afford the borrower time to sell the property,” according to analysis by Morningstar, which values the hotel at $338.4 million, well above the balance of the loan, which reached the end of its term in June 2016.
The troubles at the Intercontinental provides a window on New York’s hotel market, which has been flooded with new supply, though demand remains relatively strong. The average daily rate at the 607-room hotel is down about 8.8% since issuance, though the hotel’s occupancy rate remains in the low 90% range.
“With the balance of securitized commercial mortgages backed by New York City hotels at $3.74 billion as of July, we remain concerned with a projected slowdown in demand for Manhattan hotel rooms as supply grows,” according to Morningstar.
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