Home News Bowery Hotel Faces Foreclosure, $10M Judgment

Bowery Hotel Faces Foreclosure, $10M Judgment

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Left to right: David Paz of Omnia Group and Brad Wilson of Ace Hotel at 225 Bowery Street (Getty, Google Maps, LinkedIn/David Paz, LinkedIn/Brad Wilson)

Eight years later, all the developer’s quests to redevelop Bowery’s hostel have failed, and the house appears to be gone.

David Paz’s Omnia Group has spent much of the past decade transforming an old brick tenement at 225 Bowery into a niche hotel in Manhattan’s rapidly gentrifying Lower East Side. But after navigating a series of starts and stops, including operating the hotel as a homeless shelter during the pandemic, Omnia was sentenced to $10.4 million in a dispute with a former management partner. properties.

This adventure started in 2014. Records show that an LLC affiliated with Omnia bought him his ten-story row house between Stanton and Rivington streets for $30.5 million. Omnia partnered with Ace Hotel, a hospitality chain specializing in artistic and secluded boutiques, to brand and manage the project as 200 leading ‘distilled service micro hotels’. A line of minimalist accommodation.

In return for their services, Ace will receive 3% of the hotel’s annual gross revenue, plus certain performance-based bonuses. The contract set him for 10 years, with two subsequent five-year extensions, with only Ace having the option to withdraw.

Omnia renovated a dilapidated building into a hotel, $80M Gap Mortgage From Bank Hapoalim in March 2019. A hotel in the sister city opened that month, but had to close just a year later because of the pandemic.

That’s when things went off the rails.

When a surge in New York’s homeless population pushed shelters to the brink, the city struck deals with closed hotel owners and began placing people looking for housing on their properties. In May, Paz of Omnia emailed his Ace counterpart about one such proposal for a sister city. Paz’s email read more like a notice of intent than a question of consent, Ace argued in its Request for Arbitration.

“If I join the company, please tell me what role Ace will play. [the homeless shelter agreement]Pass wrote, according to the filing.

The city paid the hotel $110 per room from June 2020 to June 2021. Shortly after the homeless shelter contract ended, the owners rebranded the hotel to 3 Freeman Alley Untitled and began renting out individual rooms on Airbnb. arbitration.list on the Airbnb site The Ace Hotel advertises “urban hotel rooms in the heart of New York City,” but the Ace Hotel claimed to have violated its contract with Omnia.

Screenshot of Untitled's AirBnb page on October 11, 2022 by Joe Lovinger

Screenshot of Untitled’s AirBnb page on October 11, 2022 by Joe Lovinger

The new revenue stream apparently wasn’t enough to keep the hotel profitable, as owners soon began to lose payments on their Gap mortgage. In April, I applied for a hotel foreclosure and appointment of a trustee. Omnia moved to dismiss the action based on the expertise of the filings. The lawsuit is still pending, and attorneys for both sides have returned requests for comment.

While the court disputes whether Omnia will lose the hotel, Omnia is also embroiled in a dispute with Ace over their decision to operate as a temporary homeless shelter.

In January, Ace filed for arbitration, alleging that Omnia had breached its contract by making the city the operator of the hotel. He claims he did not agree.

The hotel operator further alleges that Path overutilized its hotel with an $80 million gap loan, forcing it to pursue quick cash against the long-term interests of the partnership. increase.

In September, an arbitrator awarded Ace $10.4 million and ordered the hotel owner to stop displaying trademarks associated with sister city brands. In a lawsuit filed last week to force arbitration, Ace alleges Omnia has neither paid nor stopped displaying branding.

For most of the 20th century, the Salvation Army ran a low-cost hotel for men on site.cheap hotel” At the Bowery, we were able to rent a room, but very little else.

They provided housing for thousands of low-income New Yorkers, but the one-room occupancy buildings also became associated with vice and urban decay. discouraged and eventually banned Construction of a studio building.

From 1997 until the building was sold to Omnia in 2014, the Salvation Army’s Chinatown Corps provided meals, classes, and social services for seniors on the building’s bottom three floors.

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