Yellowstone buys $106M note backed by New Yorker Hotel

The sticky note attached to the iconic New Yorker Hotel in Manhattan has a new owner.

Isaac Hera’s Yellowstone Real Estate Investments purchased M&T Bank’s $106 million loan backed by the hotel, the Commercial Observer reported. The purchase price isn’t clear, but the note is said to have traded “close to par.”

Newmark started marketing the loan on behalf of the bank in July, soliciting bids from interested parties into August. The senior mortgage’s loan-to-value ratio is 43 percent; M&T decided to sell it in part due to the regulatory capital treatment involved with hotel loans.

Newmark’s Adam Spies and Steven Schultz were part of the team that led the negotiations.

The Unification Church owns the property at 481 Eighth Avenue, purchasing it for $5 million in 1976. A decade ago, the church launched a $30 million renovation of the property and shortly thereafter, rebranded the hotel under the Wyndham brand.

The 1.1 million-square-foot property has 1,000 hotel rooms, 140,000 square feet for student housing, 110,000 square feet for office space and 16,000 square feet of retail space.

Hera’s private equity firm is focused on value-add and opportunistic real estate deals in the United States. Last spring, United Kingdom-based EPIC handed Yellowstone the deed for a troubled Times Square office property; the deed in lieu of foreclosure came with a $161.1 million valuation of the property at 220 West 42nd Street.

The debt that led to EPIC’s trouble was a $150 million loan provided in 2017 by M&T Bank to refinance the historic building. Yellowstone purchased the note months before receiving the deed from EPIC.

Two years ago, Yellowstone shook up the distressed hotel market in Manhattan, buying the 600-key Watson Hotel on West 57th Street in one of the first significant hospitality deals since the onset of the pandemic. Yellowstone bought both the leasehold and the mortgage held by HSBC.

Holden Walter-Warner

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