Thomas Kearns Quoted in Real Estate Alert on Hotel Leaseholds That are Under Extra Stress During a Crisis

Olshan Real Estate partner Thomas Kearns was recently quoted in Real Estate Alert regarding COVID-19 and its negative impact on hotels operating on ground leases.  Due to the current pandemic many New York hotels are closed which has caused many hotel operators to have to look for relief on their debt and lease obligations.  Mr. Kearns said, “Typically, the ground leases require payment of rent no matter what . . . They are very strict,” he continued, “There’s going to be a lot of leasehold mortgagees scratching their heads and saying, Should I write this check and protect the collateral?” Each hotel operator’s situation differs and whether or not they will be able to resolve the problem depends on the relationship of the parties.  The situation can be exacerbated if there are multiple parties involved in the ownership and debt encumbering the leasehold and the fee interest. “You can sometimes have a four-party story going on,” said Kearns. “It can get pretty complicated.”