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Four Seasons Hotel In New York Is Latest Victim Of CRE Crash

Tyler Durden's picture


The CRE crunch continues claiming victims, with the latest being the Four Seasons Hotel in New York. And while Stuyvesant Town is some dinky little project somewhere on the East side of New York (or so prevailing thought runs), which few care if it goes belly up or not, the fat cats that frequent the opulent hotel on 58th street next to the brothel, pardon, gentlemen's club, which is Tao in all but name, may be a little more concerned about this one. In addition to the Four Seasons, three other luxury hotels, which back a loan sent to a special servicer 10 days ago include the Four Seasons Biltmore Resort in Montecito, the ritzy Las Ventanas in Cabo, the destination of many a banker closing dinner, and the San Ysidro Ranch in Montecito.

The special servicing action has forced S&P to place 15 classes of bonds backed by a $425 million loan to Ty Warner Hotels & Resorts on "credit watch with negative implications." The catalyst for the action and the transition to special servicing was prompted by a staggering drop in cash flows from properties which came 46% below S&P expectations. The loan, which matures in January 2010, and which investors were hoping to recoup full principal on, may now be looking at substantial losses. And due to the declining cash flow, the loan would not qualify for an extension as it is in breach of it debt service coverage ratio.

More indicative of the collapse in the luxury hotel segment is the drop in occupancy for the four properties from 69% in the last fiscal year to a meager 58% recently. Alas the Ty Warner penthouse pictured insert unfortunately does not seem to be seeing a lot of action (if any) these days.

The full blown impact of CRE deterioration on the hotel industry could escalate rapidly: according to RealPoint there are over 1,500 loans with a total balance of nearly $25 billion which may be in danger of default.

The silver lining: REITs now see cap rates at or below 6% in perpetuity... Which unless they are seeing something in the ultraviolet end of the electromagnetic spectrum that is invisible to everyone else, is almost believable.


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Mon, 10/26/2009 - 18:03 | Link to Comment anynonmous
anynonmous's picture

add to that list

the Four Seasons Great Exuma (Emerald Bay)


and my favorite

Sillerman's Anguilla treasure Temenos


where they didn't even keep the website LOL

Mon, 10/26/2009 - 18:30 | Link to Comment MarkD
MarkD's picture

Looks like Great Exuma closed back in May.


Mon, 10/26/2009 - 18:38 | Link to Comment geopol
geopol's picture


Your looking hansom as ever... But with the current situation, I wouldn't buy any green bananas..

Mon, 10/26/2009 - 19:38 | Link to Comment Mad Max
Mad Max's picture

And don't forget the Elbow Beach Club in Bermuda.  Heard it closed the main building recently (much newer outbuildings apparently still open).  It is/was expensive and used a fair bit by business travelers.

Mon, 10/26/2009 - 19:54 | Link to Comment anynonmous
anynonmous's picture

a dump

Mon, 10/26/2009 - 18:08 | Link to Comment MsCreant
MsCreant's picture

We had joy, we had fun, we had seasons in the sun.
But the wine and the song,
like the seasons, all have gone.

Terry Jacks

Mon, 10/26/2009 - 18:34 | Link to Comment deadhead
deadhead's picture

i will get you back for that HORRENDOUS earworm you just gave me!

Mon, 10/26/2009 - 21:14 | Link to Comment MsCreant
MsCreant's picture

Bring it baby! I'm waiting...

Meanwhile, keep singing it with me...

We had joy, we had fun, we had seasons in the sun.
But the hills that we climbed
were just seasons out of time.

And again...

We had joy, we had fun, we had seasons in the sun.
But the stars we could reach
were just starfishs on the beach



Mon, 10/26/2009 - 23:02 | Link to Comment DaveyJones
DaveyJones's picture

or this one from Pete Seeger (and Ecclesiastes)

To everything - turn, turn, turn
There is a season - turn, turn, turn
And a time for every purpose under heaven

A time to be born, a time to die
A time to plant, a time to reap
A time to kill, a time to heal
A time to laugh, a time to weep

Mon, 10/26/2009 - 23:20 | Link to Comment MsCreant
MsCreant's picture

"There is a season - turn, turn, turn"

I was looking to riff on the idea that one of the Seasons hotels might have a rotating top floor. Check the clip in its full hubris. Only in Dubai:

I am sure they are lining up to finance this sh!t.


Tue, 10/27/2009 - 05:34 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

It's nice to find a financial blog where the adults are in charge.

Or not. :>)

Mon, 10/26/2009 - 23:49 | Link to Comment Cistercian
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Tue, 10/27/2009 - 00:15 | Link to Comment MsCreant
MsCreant's picture

I liked the comment you removed, it was right on the money.

Tue, 10/27/2009 - 00:22 | Link to Comment Cistercian
Cistercian's picture

 Thank you very much.These are dark times, and I reconsidered because I did not want to add to anyone's despair.



Tue, 10/27/2009 - 02:16 | Link to Comment MsCreant
MsCreant's picture

Inside destruction lies the seeds of creativity. Compost is the intersection of death and life. I have moments of being afraid, but that is only because I can't tell how it is going to fall and I get so obsessed with planning, I fail to remember the big picture. The way we are living is corrupt. The things we value are corrupt. We are sick, almost everyone of us. Maybe a monk or a Cistercian could escape it, but not much of anyone else. We get caught up in our own individual storylines and we have failed to question the stories we have been handed.

I wanted to post a video for you by an old group called Soundgarden called Blackhole Sun, but I seem to be locked out from Youtube at this computer. There are lyrics, "Black hole sun, won't you come, and wash away the reign." Your black sunnyness comment made me think of that song. Point being, a blackhole sun destroys, but it also washes away the reign. Thus your comment was not necessarily dark, because it made me think of the light.

Peace Cistercian

Tue, 10/27/2009 - 05:38 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

As requested. A classic if ever there was one.


Tue, 10/27/2009 - 08:02 | Link to Comment Bearish Spirits
Bearish Spirits's picture

Kind of sad to hear Soundgarden referred to as "an old group."  :-(

Tue, 10/27/2009 - 08:28 | Link to Comment deadhead
deadhead's picture

blackhole sun is a great tune (not my generation, but I always liked hearing it).

Tue, 10/27/2009 - 08:58 | Link to Comment Cistercian
Cistercian's picture

 I know that song.And you are right about death/ death, no rising.I strongly feel at this point that there will have to be a serious disruption/calamity for the people to rise up and seize control of the resultant mess.Choosing a new flavor of evil to "fix" things no longer the current situation demonstrates so well.I think everyone has to become more active, more informed.

We are in depraved times.I think when that idiot said "greed is good" was in particular an Epic Fail.It was also an indication of how far we have fallen.I remain hopeful that the people, once they know what is happening, will do something.They just have to be careful not to follow the pied piper of the moment....and insist on something better.


Tue, 10/27/2009 - 11:30 | Link to Comment tip e. canoe
tip e. canoe's picture

"Inside destruction lies the seeds of creativity. Compost is the intersection of death and life."

beautiful & poignant those lines.

i learned more about how the world really works (human systems included) starting a compost bin than in 4 years of studying philosophy & economics in college.  i highly recommend it.

(plus you can get a free methane high every so often)


Tue, 10/27/2009 - 17:03 | Link to Comment MsCreant
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Mon, 10/26/2009 - 18:58 | Link to Comment Lionhead
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Maybe it's time for a season of "fire" to occur on such places?  Warren are you covering?


Mon, 10/26/2009 - 18:14 | Link to Comment Mazarin
Mazarin's picture

Anybody know if the St. Regis Aspen sold yet? If so, what was the price?? Rumor was they were shooting for $100m. It's probably worth $35m

Mon, 10/26/2009 - 19:43 | Link to Comment Anal_yst
Anal_yst's picture

Speaking of St. Regis, I can't Imagine the South Florida (Miami-ish) property is doing very well...

Mon, 10/26/2009 - 18:16 | Link to Comment Anonymous
Mon, 10/26/2009 - 18:17 | Link to Comment Rainman
Rainman's picture

Holy shit, this is starting to add up to some really, really lost money.

Let us not forget those occupancy rates and the overall revenue effect do not include the promo pricing, which is now everywhere in the hotel industry, especially high-end. Occupancy is not the only devil facing the high-end outfits, I'm afraid. And many are short on cash to promo their way into higher occupancy.

Mon, 10/26/2009 - 18:33 | Link to Comment anynonmous
anynonmous's picture

The hotel companies had at least some foresight by getting investors to partner with them in those once oh so common Hotel Residences purchase schemes - "after all how could a Four Seasons ever go under?" just ask the poor folks who piled into Emerald Bay in Exuma, a location that once connoted luxury and all things exotic but now sounds like a disease.

Mon, 10/26/2009 - 18:42 | Link to Comment Rainman
Rainman's picture

Pretty soon the wannabe millionaires will be taking over the previous dwellings of multi-millionaires for a song and a glass of aged port. A windfall for the common wo/man.

Eureka !! 

Mon, 10/26/2009 - 18:19 | Link to Comment lizzy36
lizzy36's picture

tyler, how do you know the gentleman's club is a brothel?

Mon, 10/26/2009 - 18:24 | Link to Comment MsCreant
MsCreant's picture

Nice catch. I second the request for an answer to this question.

Mon, 10/26/2009 - 18:58 | Link to Comment Anonymous
Mon, 10/26/2009 - 19:44 | Link to Comment Anal_yst
Anal_yst's picture

Tao isn't *actually* a stripclub or a brothel, at least publically, it is a restaurant/bar/lounge.  What happens there, or starts there, though, I believe is that to which Tyler was referring.

Mon, 10/26/2009 - 18:23 | Link to Comment bpj
bpj's picture

Someone get Fidel on the horn, he knows what to do with a surplus of luxury hotels.

Mon, 10/26/2009 - 18:31 | Link to Comment anynonmous
anynonmous's picture

you mean that the Four Seasons New York will become an all inclusive

Mon, 10/26/2009 - 18:33 | Link to Comment geopol
geopol's picture

The idea of soliciting Fidel is a very good one...Maybe Madoff, hey listen, when the Vegas casino gets tipped over by some slick operator,, they hire him..


On to the next project

Tue, 10/27/2009 - 08:53 | Link to Comment optionswriter
optionswriter's picture

Our friend in Venezuala is pretty good at that too.  Didn't he just grab the Hilton properties?  Great album cover incidentally.

Mon, 10/26/2009 - 18:26 | Link to Comment system failure
system failure's picture

It sure feels like its (P3) is starting to hit home now. The People who have invested wisely and been awaiting to finally see the seasons in the sun.  

Mon, 10/26/2009 - 18:38 | Link to Comment DBLTapViper
DBLTapViper's picture

I just went on the Four Seasons Hotel website guess what the going rate is for tonight...?  (and they wonder why it's going belly-up) How about $1,100.  I figure we sell it to Motel 6 and get Tom Bodett to talk about the whore house next door, plus, a flashing neon sign and we're there! 

Mon, 10/26/2009 - 19:05 | Link to Comment geopol
geopol's picture

Well that does it,,,, One of the best comments this evening,,,I use evening because we are after all talking about the four horsemen...

Mon, 10/26/2009 - 19:12 | Link to Comment Rainman
Rainman's picture's a web site trap. You call the 800 #, start haggling, and get the room for $99.99. They're going car dealer pricing, I tell you. You must pretend to be in the know.

Give em a call. Let me know what they tell you.

Mon, 10/26/2009 - 21:05 | Link to Comment Anonymous
Mon, 10/26/2009 - 21:37 | Link to Comment JR
JR's picture

And we'll turn the light off for you.

Mon, 10/26/2009 - 18:45 | Link to Comment Anonymous
Tue, 10/27/2009 - 02:02 | Link to Comment Anonymous
Mon, 10/26/2009 - 19:06 | Link to Comment Anonymous
Mon, 10/26/2009 - 19:07 | Link to Comment Anonymous
Mon, 10/26/2009 - 19:26 | Link to Comment Froggy
Froggy's picture

Isn't Ivanka Trump "developing" a "Condotel" in SoHo right now?  Who is lining up to take out that construction loan? 

I am getting that feeling I had in August 07 when banks started to not fund residential loans.  I am looking at a bunch of REO CRE stuff for my fund and the banks will not even acknowledge you if you are not bringing straight cash.  They know that THEY can't get the deal underwritten in their origination shop and figure nobody else can.  So why let me tie up a deal for 45 days of financing contingency when they don't believe I can get the loan knocked all?  If you do have the cash, it seems that they will take just about whatever they have to in order to get rid of a distressed asset. 


Something is happening.  I haven't heard anybody say "Green Shoots" in a long time.

Mon, 10/26/2009 - 19:36 | Link to Comment Mad Max
Mad Max's picture

This 100% echoes Karl Denninger's post from a day or two ago.  This is all your independent experience, right?  Ominous.

Mon, 10/26/2009 - 19:47 | Link to Comment Rainman
Rainman's picture

The banksters view CRE loans with disdain at this time. Like some asshole crying " FIRE " in a crowded theatre. Same reaction. Run like hell.

Having survived through a not-nearly- as-severe event such as this about 17 years ago, I can relate that a local community bank connection has at least some possibility. If it's super-jumbo, though, it is now a cash n' carry world.  

Mon, 10/26/2009 - 19:27 | Link to Comment Anonymous
Mon, 10/26/2009 - 19:58 | Link to Comment Anonymous
Mon, 10/26/2009 - 21:42 | Link to Comment Marvin T Martian
Marvin T Martian's picture

warner's not that clever. he invented beanie babies in an apparent fluke and then went on a bender that puts lotto winners and nfl first round draft picks to shame.


he seriously overpaid for those montecito hotels, and promptly dove into a massive reno, the price of which was comparable to what he paid for the props. if i remember correctly he said at the time that he didn't care about the money, he just wanted to own them. he outbid some very deep pockets whose business sense prevented from paying a suicidal amount. the amounts he was spending would have taken thousands of years to recoup from cash flow.


meanwhile, he embarked on building the largest private residence anyone has ever heard of, also in montecito.


the guy has no business sense whatsoever- he just charged into montecito and blew his wad. not the first time that's happened- there's something in the water that makes people loose all sense of reality and the value of money. it's strange.


i remember thinking at the time that of all the crazy deals i've heard of, that one was by far the stupidest. total amount was around a billion, and those hotels don't have many rooms nor much unrestricted/developable land. as they say- a fool and his money are soon parted. it sounds like he's loosing his shirt so got the hook.


nevertheless, those props are gems- but only at the right price.

Mon, 10/26/2009 - 20:46 | Link to Comment DBLTapViper
DBLTapViper's picture

Ty Warner, the beanie babies and whorehouses...  I knew New York was kinky but....


Mon, 10/26/2009 - 22:13 | Link to Comment JR
JR's picture

Here’s some additional filler information relating to the overall deterioration of the hotel industry from blogcatalog:

Current Economic Environment Is Primary Force Impacting Meetings

Meeting planners this year and next are facing meetings cancellations, budget cuts, sloping attendance and a negative net impact on destinations and host hotels, according to a survey of 516 meeting planners released [in June] by Ypartnership in conjunction with the Professional Convention Management Association and American Express…

Of the respondents, 44 percent said they are planning fewer offsite meetings this year and next, compared with last year, and about 47 percent said the number of meetings would remain flat in 2009 and 2010.

“The primary force that is impacting adversely the meetings and conventions business in America today is the current economic environment,” Ypartnership chairman and CEO Peter Yesawich said during a conference call today…

Yesawich noted that resorts and upper upscale and luxury properties likely will be the biggest casualty of cuts and cancellations, while urban hotels and airport hotels could be the beneficiaries of any increased meetings business.

The average meeting planner respondent expects to cancel or postpone the equivalent of more than $500,000 in room revenue between now and the end of 2010, representing a net loss in total room revenue of $780 million among them.

Noting that for every dollar spent on rooms, an additional $3 goes to food, entertainment and other meeting services, the report estimates $2.5 billion in lost revenue to hotels and host cities for meetings-related services from this respondent base alone, Yesawich said. “This estimate is by no means an industrywide estimate, but rather an estimate exclusive to this audience,” he said, noting, “There’s a substantial multiple beyond this number.”

According to the survey, 56 percent of respondents expect meeting attendance to be down through 2010, compared with last year. Two-thirds are dealing with slashed meetings budgets this year, by an average of around 20 percent. “About half of those planners expect that trend to carry well into 2010,” Yesawich noted…

Yesawich said , “It is unlikely, however, a lot of that positive turn will occur in 2010. It is more likely that will be 2011 and beyond.”

Tue, 10/27/2009 - 00:52 | Link to Comment Anonymous
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