Goldman Sachs Takes Control of Slatkin Brothers' Debt-Ridden Santa Monica Hotels
Goldman Sachs has acquired the loan on the Slatkin brothers' luxe Santa Monica hotels, Casa del Mar and Shutters on the Beach. The loan, worth $280 million, was sent to special servicing over the summer due to a disagreement between the hoteliers and the lender regarding one of the loan's extension provisions.
The Slatkins claimed that they were unable to meet the maturity extension conditions, but stated that the dispute was solely related to the calculation of a replacement interest rate cap. They also asserted that replacement financing in excess of $280 million has been arranged with another lender, which will be used to repay the senior loan in full.
The hotels have approximately $400 million in debt, including a $120 million mezzanine loan from a consortium of funds tied to Goldman Sachs. The latest Morningstar data shows that the debt service coverage ratio is just below one, indicating that the hotels are not generating enough cash to cover their debt obligations.