CIM Group Takes Over Trump Soho in Foreclosure Auction
The CIM Group, a Los Angeles-based developer, has won a foreclosure auction, which allows them to take control over the battered Trump Soho Condominium Hotel located at 246 Spring Street. The CIM Group, known for their record-breaking development at 432 Park Avenue (with codeveloper Macklowe), didn’t just step into unknown ground by winning the auction—they were already the junior lender. The debt defaulted in June.
Trump Management itself has never actually owned the luxury property. It was only involved in a licensing agreement to operate it, and thus give it its name.
The developer of Trump Soho, the Sapir Organization and Bayrock Group, has had a bumpy road right from the beginning. Their problems included an uproar from the neighbors, who claimed the glass tower doesn’t fit into the neighborhood, two accidents on the development site, legal issues with some buyers, and the zoning.
Since it exists in a manufacturing zone, the zoning didn’t allow the selling of full-time residences, so a different business model had to be found. The choice was between a regular hotel and a kind of hotel/condo hybrid, which to date had been unknown in New York City. This model, which had been successful in Florida and other resort areas, gives the buyer the right to use the unit for up to 120 days a year. The rest of the time it would be used as a hotel unit, and the profit would be shared evenly between the owners and the developers.
The sharing model didn’t really pick up and prices were falling: Since Trump Soho opened in 2010, only one third of the 391 units found a buyer. To be fair, the financial crisis in 2008 contributed massively to the difficulty in attracting buyers.
Now it will be interesting to see if CIM keeps the building or sells it, and, either way, if the building remains a hotel/condo hybrid or if the remaining units are converted purely into hotel suites.