From Cipriani to the Princeton Club: Can These NYC Icons Make It Through 2022?
NYC Real Estate Icons Like Cipriani Struggle as Omicron Surges
(Bloomberg) -- This was supposed to be the year New York City restaurants, bars and hotels started to recover from the pain of the Covid-19 pandemic. Now, as the omicron variant forces flight cancellations and shutters Broadway shows once more, the timeline for a broader industry comeback is again in question.
It’s a brutal blow to hospitality companies that managed to survive 2020, but spent this year slowly rebuilding amid a slow rebound for tourism. While health experts expect the variant to be short-lived, and those who fall ill have reported less severe symptoms, omicron could still be the final straw for a new wave of real estate borrowers.
“All of the hotels that were hoping for a big December after a bad 18 months are not going to get the Christmas presents that they necessarily hoped for,” said Neil Shapiro, a partner in Herrick Feinstein’s real estate practice, said in an interview. “Once you have an empty hotel room, you never get that back.”
We look at some of the New York institutions that closed their doors this year, and ones that remain under pressure. Unless otherwise noted, representatives for the companies didn’t immediately respond to requests for comment.
This iconic Midtown restaurant opened as a speakeasy on Jan. 1, 1930, and catered to presidents, celebrities and the who’s who of New York before it announced its closure late last year and laid off employees in March 2021. The wrought-iron gate gave way to a hot-spot with a secret wine cellar where Jacqueline Kennedy Onassis once partied with Frank Sinatra, and Donald Trump dined after his presidential win. A representative for LVMH Moet Hennessy Louis Vuitton SE’s Belmond Ltd., which owned the restaurant, said in a statement to Bloomberg that it hasn’t yet decided how to use the space going forward.
The hospitality company with multiple Italian restaurants and event venues faces foreclosure on a $53 million loan backed by two of its New York properties that’s been in default since May 2020. Cancellation of corporate parties and galas -- the lifeblood of many upscale bars and restaurants -- due to Covid has pressured the company. Cipriani has its roots in Harry’s Bar, a Venetian establishment opened in the 1930s, where Giuseppe Cipriani later invented the Bellini cocktail.
The storied Midtown social club shut its doors this year after defaulting on $40 million of mortgage debt, but it may yet have found a savior in billionaire Eric Schmidt, whose family’s investment office has bid on the loan. The club faces a cash crunch after it closed for 15 months during the pandemic and lost about one-third of its paying members. Ninety-nine employees risk being laid off, according to a notice filed with the New York Department of Labor, which added that the club is hoping for a “friendly buyer” that will help it reopen.
The owner of the Standard High Line Hotel in New York is countersuing its lenders in a bid to stop a foreclosure on the property. The 338-room hotel, which straddles the High Line on Manhattan’s West Side, fell behind on mortgage payments last year, and was closed from March to September 2020.
Covid-19 has been particularly hard on mega hotels located in Times Square, a tourist-magnet that sat eerily empty during the worst months of the pandemic. Ian Schrager’s Times Square Edition, a 452-room hotel and retail space once valued at more than $2 billion, is heading to a foreclosure auction after defaulting on a contract with Marriott International Inc. Neither Marriott nor Schrager are responsible for the debt, and the hotel reopened this summer after the pandemic shut its doors for more than a year.
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