Sales of units in condo-hotel projects throughout the country have ground to a halt because it’s so difficult for individuals to get credit. Instead, most investors would have to pay cash, and many are reluctant to do so when the overall hotel market is so weak.
The Trump SoHo hotel and condominium has too many vacancies.The 46-story building is scheduled to open April 9 in Manhattan. Sales were initially brisk, but only about a third of the 391 units are now in contract. What’s more, it isn’t clear how many of those will actually close, because that process won’t begin until the hotel opens.The hotel, which was announced on a episode of Donald Trump’s hit television show, "The Apprentice," is another of the boom-time projects that looked easy to finance until the recession hit. Recently, Bank of America dumped a mezzanine loan on the project for a fraction of its $75 million face value, according to people familiar with the matter. Now, the developer is in restructuring talks with lenders who hold some $350 million in debt. The Trump SoHo’s disappointing sales expose a huge fault line in the condo-hotel business model.
By Craig Karmin, March 29, 2010 WSJ
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