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The Trump Soho hotel-condominium tower in Lower Manhattan is facing foreclosure. The tower has struggled to find buyers since it opened for sales in 2007.

Auctioning of Condos

Los Angeles-based investment firm, CIM Group holds a loan on the property. CIM has plans to take control of the building and has hired on brokerage Eastdil Secured LLC to handle auctioning off the remaining condos. Donald Trump’s Trump Organization manages the hotel but has no equity stake in the tower. It’s named is licensed to the property.

Developed by the Sapir Organization and Bayrock Group LLC, owners are only able to use the condos in the 46-story tower for 120 days of the calendar year. During the rest of the year, the condos are offered as hotel rooms. The owners then share in the rental avenue.

Of the 391-units available, the Trump Soho has only recorded about 122 completed deals, according to the appraiser, Miller Samuel Inc. Fifty-eight of the units are listed for sale currently. The prices range between $915,000 for a studio to $50 million for a 10,000-square-foot presidential suite. “The challenge of this building is a very high price per square foot paired with extremely high carrying charges related to the hotel services they were trying to market,” said Jonathan Miller, president of Miller Samuel. “This is essentially a hotel with hotel-like services, in a market with large residential lofts,” said Miller. “It didn’t seem to get traction.”

Financing in 2010

In 2010, CIM offered new financing to the property to help pay down $100 million of debt on the building that Sapir and Bayrock owed to iStar Financial Inc. At that time, the existing mortgage was $295 million.

Potential Future Purchase

CIM is not commenting on the planned sale. Alex Sapir, president of the Sapir Organization, said that the “current structure” of the property “does not make economic sense for ownership.” He went on to say the company may look to repurchase the hotel at a later date. “I would like to thank my dear friend Mr. Donald Trump and the Trump Organization, who were valuable partners and provided excellent management services to the hotel, both during and after the Great Recession,” Sapir said.

According to Alan Garten, the Trump Organization’s general counsel, Trump Organization will continue to manage the hotel. “It’s a hot spot and prime destination for celebrities and jet-setters,” he said.

Eastdil Secured’s Douglas Harmon and Adam Spies are handling the foreclosure.

Source: Bloomberg Businessweek, Manhattan’s Trump Soho Condos Said Planned for Auction, September 16, 2014

RHM LAW LLP

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