NorthStar Realty Finance Corp.’s legal battle over its investment in the Hard Rock Hotel in Las Vegas took a new twist Thursday, with the lender saying it has lined up a company to manage the property after a foreclosure.
In a New York Supreme Court filing, an attorney for NorthStar said the Navegante Group of Las Vegas will manage the property if it receives approval for its planned foreclosure.
On Tuesday, owners of the Hard Rock sued NorthStar after it announced plans to foreclose Monday on the property.
In its lawsuit, the Hard Rock claimed the foreclosure attempt two days before the majority of substantial debt senior to the NorthStar loan was “tactical and self-centered rather than a legitimate attempt to vindicate its legal rights.”
The Hard Rock also disputed claims by NorthStar that it’s in default on a $95 million loan from the lender. The hotel-casino claimed foreclosing after only five business days is not reasonable.
Attorneys for the Hard Rock have yet to respond to NorthStar’s court filing.
But in its court filing, NorthStar said the foreclosure was the only way it could protect its interests as a restructuring of Hard Rock’s $1.36 billion in debt might leave the New York-based lender unpaid.
NorthStar also claimed in the filing that the owners of the Hard Rock missed a monthly interest payment of approximately $460,000 that was due on Tuesday.
On Wednesday, $1.25 billion in debt will mature, the Hard Rock said. The company has not disclosed whether it plans to restructure or extend the debt.
NorthStar said it was confident it would receive approval by Tuesday from Nevada gaming regulators for Navegante to operate the property. NorthStar also hired Global Gaming & Hospitality LLC to handle the foreclosure sale.
“NRFC is firmly and fully committed to completing its scheduled foreclosure,” according to the court filing. “It has already made a payment of more than $3.8 million … to protect its right to do so.”
The company said the “best chance of recovering the largest portion possible of its approximately $95 million loan balance” is to take control of the Hard Rock.
The Hard Rock Hotel is majority owned by a subsidiary of Credit Suisse AG, while Morgans Hotel Group in New York has a minority position and manages the property.
Contact reporter Chris Sieroty at firstname.lastname@example.org or 702-477-3893.