In a rarity for commercial real estate these days, the value of a Montauk asset jumped after a short stay in special servicing.
Gurney’s Montauk Resort & Seawater Spa — owned by Lloyd Goldman’s BLDG Management – was recently reappraised at $280 million, a 15 percent increase from its $244 million value when the loan was made in 2021.
A spokesperson for BLDG did not immediately comment.
When the loan was first issued, the high-end resort was the toast of the island. DBRS Morningstar said the hotel “performed extremely well” during the early days of Covid as wealthy New Yorkers flocked to it for a close-to-home oceanside sojourn. But the $271 million loan ultimately landed in special servicing for maturity default in late 2024, a transfer BLDG chalked up to an administrative hiccup that delayed the loan extension.
Despite loan data showing a years-long trend of declining occupancy and revenue that could not cover monthly mortgage payments, the BLDG team stressed that the deal was in good shape.
“The hotel continues to thrive and remains an outstanding asset in the portfolio,” BLDG COO Justin Kleinman said in January.
Around that time, Gurney’s was shuttered for renovations.
In February, the resort reopened and BLDG scored another year to pay off the debt. The trade-off: a $9.4 million paydown of the loan and a $3.1 million personal guarantee.
Through the paydown, BLDG was able to hit a debt yield hurdle — a means to measure asset health by weighing revenue against the loan amount. The $3 million served as an extra cushion if income slipped.
Any time an asset transfers to special servicing, it typically receives an updated appraisal.
The resort’s facelift, which is ongoing, likely drove the value bump. Gurney’s soft-launched The Dune Café & Lounge earlier this winter, according to the New York Post. Two other restaurants, Gigi’s Montauk and Gigi’s Café, are set to open this spring, according to Dan’s Papers.
When BLDG and partner Metrovest Equities bought Gurney’s in 2014, the team pumped $54 million into refreshing guest rooms, common areas, amenities and restaurants and building out a $16.4 million spa that draws on ocean water to fill a full-size swimming pool.
Read more
Ritzy Montauk Resort was a pandemic winner — until Lloyd Goldman’s $217M default
Lloyd Goldman coughs up $9M, inks personal guarantee to extend Montauk Resort loan
The Hamptons hotel that conquered Covid
