Bondholder Seeks Sale of GFI Hotels to Cover $60M Debt
A proposal to sell two New York hotels aims to resolve a $60 million debt crisis for a GFI Capital affiliate.
A bondholder holding over five percent of the debt is demanding the sale of two hotels. The goal is to raise funds to repay more than $60 million in liabilities. This move follows recent defaults by the GFI Capital affiliate. The proposal requires a vote from other investors on September 15.
Restructuring Terms and Financial Terms
The filing on the Tel Aviv Stock Exchange outlines specific terms. Debt repayment would be deferred for two years. Bondholders would receive an upfront payment of $15 million. During the deferral period, the interest rate would be set at 13.5 percent. An advisor must be hired to oversee the hotel sales.
Hotel Performance and Valuation
The Beekman Hotel in Lower Manhattan is valued at $310 million. It has 287 keys and is managed by Hyatt. Occupancy reached 81.71 percent through July. Net operating income for the same period was $7.9 million. The Hotel Seville NoMad is performing significantly worse. Its occupancy fell to 61.14 percent in July. Net operating income was only $290,650 through July.
Broader Market Context for Developers
GFI is part of a group of US developers facing issues in the Israeli bond market. This market offers cheaper financing than US banks. Simad Holdings missed payments in May and diverted $34 million. An affiliate of Kohan Retail Investment Group disclosed loan diversions. GFI owns other assets including the Ace Hotel New York. These include ONE11 Residences and Brooklyn condos.
