Reorganization sees Caspi Development take the reins from Mactaggart Family & PartnersAfter years of headaches, the long-delayed luxury hotel project at 456 Greenwich Street has finally secured a construction loan and is emerging from bankruptcy.

The partnership entity, CBCS Washington Street LP, received confirmation for a reorganization plan in bankruptcy court earlier this week, court filings show. The plan includes a three-year, $135 million construction loan commitment from South Korea’s Hana Financial Investment.

“The project can see the light again,” said Joshua Caspi of Caspi Development, one of the co-general partners, in an announcement Thursday. The 96-key hotel is currently slated to open in April 2022 under the Hotel Barriere Le Fouquet brand.

The Hana loan, which was arranged by VI Development Group’s Terence Park, will carry an interest rate of LIBOR plus 8 percent. It is the first construction financing the partnership has secured since entering into a ground lease with the Ponte family in 2013.

When the developers filed for bankruptcy this March, they claimed that the Pontes’ refusal to amend lease terms had long thwarted their efforts to get a loan for the project.

CBCS Washington Street LP, whose complex organizational structure was already completely changed from what it was at the commencement of the lease, went through another major restructuring over the course of the bankruptcy proceedings when one of the general partners was bought out by a minority investor, court documents show.

As previously reported by The Real Deal, the 99-year ground lease on the site was first arranged by budget hotel king Sam Chang and Barone Development, who later transferred their interest in the partnership to Mactaggart Family & Partners and Caspi. (The name of the entity, CBCS, still appears to reflect the names of the original partners — Chang, Barone, Chou and Silviano.)

Mactaggart Family & Partners, the co-investment platform of a family of Scottish aristocrats, had long played the more active role in the partnership. Mactaggart CFO Ivaylo Ninov provided the bulk of the affidavits and declarations on behalf of the partnership in court proceedings — including a curious allegation that the Pontes may have been colluding with the Related Companies to force them out of the ground lease.

But things have changed. “On September 6, 2019, the ownership of the Debtor’s equity was restructured, with the result that I now own, directly and indirectly, approximately 50% of the Debtor,” said Los Angeles-based investor and hotel developer James R. Parks in a court filing.

Parks had previously provided about $19 million in equity for the hotel, sourcing a portion of those funds through the EB-5 program, according to court filings. (It was previously unclear if the developers’ EB-5 fundraising efforts, in which Mactaggart had taken part, had been successful.)

“We have fully exited this investment and are no longer involved in it,” Ninov confirmed, declining to comment further.

Westchester-based Caspi Development is now in the driver’s seat on the project. “The Borrower shall be controlled by Caspi Development entities who shall make all management decisions including decisions relating to Loan,” the term sheet for the Hana loan states.

Parks will contribute another $19 million in capital for the project, the partnership says. Court filings show that he has also executed a completion guaranty in favor of the landlord on top of a completion guaranty provided by Chang years ago.

The new guaranty seems to have placated the Pontes, who have made peace with the developers. CBCS has also agreed to pay the landlord a “cure amount” of about $6.1 million, including back rent, late fees, interest and legal fees.

Additionally, the developers are set to pay $850,000 in damages to Churchill Real Estate Holdings, in connection with a prior $60 million loan agreement that fell through in 2017.

“The partnership is confident that with this financing and additional equity in place, the project will proceed without delay,” said Fred B. Ringel of Robinson Brog Leinwand Greene Genovese & Gluck, P.C., attorneys for the partnership.

Hana Financial Investment — a subsidiary of Hana Financial Group, which has over $350 billion in assets under management — has financed a number of troubled hotel projects in the U.S. this year.

In February the lender participated in a $180 million mezzanine package that helped clear the distressed note on Sharif El-Gamal’s Margaritaville hotel development in Times Square. Then in April, Hana provided $85 million in mezzanine financing for the Drew in Las Vegas, a long-stalled project that Steve Witkoff and New Valley took over in 2017.

Hana could not be reached for comment.

The resolution of 456 Greenwich’s bankruptcy proceedings “is a testament to the intrinsic value of the project on one of the greatest development sites remaining in all of Tribeca and it is sure to be an iconic and marquee hotel,” said Chris Wu, president of Teneo Capital’s Restructuring Group, who provided a feasibility opinion in bankruptcy court.

As detailed in TRD’s October issue, New York City hotel developers are facing increasing financial pressure amid booming supply and growing fears of a recession.