On Feb. 5, a court-ordered auction will be held for 139-141 Orchard St., a hotel project that’s been stalled for several years. The Daily News reports that at least one potential buyer has already come forward:
Park Ave.-based investment company Arcade Capital has agreed to pay a whopping $33 million, or $336,000 per key, for the partially-completed 98-room property at 139-141 Orchard St. and will act as the stalking horse bidder at the auction, according to legal documents obtained by the Daily News. The company will walk away with the property, which is known as the Allen Street Hotel, provided no one else shows up with a bigger check. Neither Arcade, whose principles include Gemini Real Estate Advisors executive Will Obeid, nor the listing broker, James Nelson of Cushman & Wakefield, was immediately available for comment.
Last week, Cushman & Wakefield put out a press release announcing the auction. A stalking house bid is an initial offer sought out by a distressed company to prevent low bids. A separate listing from the brokerage noted:
MKRS is also offering the ground floor and lower level of 77 & 79 Rivington Street for long-term lease, pursuant to a separate court order. This offering will not be part of the auction for Orchard, it is complementary of it.
“MKRS” refers to Massey Knakal Realty Services, which was recently acquired by Cushman & Wakefield.
The property has been mired in legal proceedings for many months. The original owner, Ben Zhavian, lost a court battle with Maverick Real Estate, a company that purchased the project’s debt.
Gemini has developed several hotels in Manhattan, including the Gem Hotel on East Houston, the Best Western at the Seaport and the Comfort Inn in Times Square.
The project must be re-started quickly. If the hotel is not finished by next August, the new developers will be forced to ask the city for special permission to complete construction. Current zoning does not permit a 16-story building at this location, but the Board of Standards and Appeals granted an exception. They imposed a deadline, however, which is now fast approaching.