Photo: Andrew Lichtenstein/Corbis via Getty Images
Even during pandemic times, the Standard Hotel has remained one of the city’s most popular party spots: you may recall that Madonna’s Pride party in the Boom Boom Room was so packed that people ended up peeing in cups because they weren’t able to get to the bathrooms. But despite the late-night crowds, the Standard is facing foreclosure.
The 338-room hotel founded by André Balazs was purchased in 2017 by Gaw Capital, a Hong Kong-based private equity firm led by Goodwin Gaw. Gaw bought the Standard for $340 million, $60 million less than it had been in contract for a few years before, and took out a $170 million acquisition loan from Natixis, a French investment bank that was bullish on hotels at a time when other lenders were pulling back. “New York’s hospitality sector is a little out of favor at the moment,” Gaw told Forbes at the time. But during the last year and a half, the hospitality sector has fallen more than a little out of favor, with a global pandemic and travel bans making Airbnb and market oversaturation seem like relatively minor woes. By June of this year, the Standard was getting decent traffic on weekends, but “remains sluggish during the workweek, when business travelers would typically pick up the slack,” according to a Bloomberg article.
Gaw stopped paying its mortgage on the hotel in May 2020 and now owes $187 million, according to a lawsuit filed in federal court by Wells Fargo, who is suing on behalf of the bond holders (the loan has been split into four separate promissory notes). Gaw’s loan agreement also has an acceleration clause, according to the Real Deal, which meant that a year after Gaw defaulted, the entire outstanding principal balance of the loan, along with all accrued interest and late charges, were due immediately.
The Standard received a paycheck protection loan earlier in the pandemic and it seems likely that it, like all New York hotels, will continue to struggle for some time (New York’s hotel bookings were at just 60 percent as of this June). Still, it would be surprising if Gaw Capital just walked away from the Standard. Gaw has more than enough capital — Forbes puts the Gaw family’s net worth at $1.6 billion — and the Standard is a trophy property. Gaw is also an experienced hotelier who has turned around the Hollywood Roosevelt Hotel, in Los Angeles, and run it successfully for decades. Goodwin Gaw bought the historic L.A. hotel out of bankruptcy for $9.5 million in 1995 and turned it into the kind of place where Kirsten Dunst and Lindsay Lohan partied and Courtney Love once famously left on a stretcher after a night out. Still, the Standard can’t be the easiest place to run at the moment. In addition to empty rooms, the building itself seems to be in distress: in January, an 8-foot hunk of cement and fiberglass fell off the facade.