SOURCE: Cassa NY Hotel and Residences

April 08, 2011 16:02 ET

Assa Properties Enters Into Binding Contract to Sell Hotel Portion of Cassa Hotel and Residences

Condominium Residences Remains Asset of Assa Properties

NEW YORK, NY--(Marketwire - Apr 8, 2011) - Today, Assa Properties, owner of Cassa Hotel and Residences, located at 70 West 45th Street, and their subsidiary, Waterscape Resorts, announced that the hotel portion of the property has entered into a binding contract with an international investor to be sold for approximately $130 million. Attorneys representing the buyers are Allen Wu of Wu & Kao and Harvey Strickon of Paul Hastings, Janofsky & Walker. Proceeds from this sale will substantially pay down the debt for Assa Properties, and leaves the condominium portion of the building, floors 27 to 48, an asset valued over $120 million, firmly in their hands.

"During the construction phase, we survived through the difficult years of 2007 to 2009. Today, we are excited to announce the sale of Cassa Hotel. We remain on target to our business plan and will soon be announcing our next project. We remain optimistic about the success of the hotel, the sale of the penthouses and residential units," says Solly Assa, CEO of Assa Properties.

The hotel remains under the management of Assa Hospitality and operations at Cassa Hotel and Residences remain unaffected. Situated in the heart of midtown Manhattan and one block from Times Square, the property maintains high occupancy levels in the hotel rooms and extended stay units. Additional public space on the ground level, including a vertical garden, will open in Spring 2011. In the coming weeks Assa Hospitality Management will announce the chef and restaurant concept, which has begun construction, and is scheduled to open in four months.

To clarify recent events, Waterscape Resorts filed two claims in the Supreme Court of the State of New York. On November 15, 2010, Complaint #652123 was filed against Pavarini McGovern and the second complaint #652035, filed in December 2010, was a personal claim of insurance fraud against Eric McGovern and William Frederick. The Chapter 11 filing by Waterscape was an action to counter an outgrowth of lien filings totaling $20 million from Pavarini McGovern, their subcontractors and mechanics.

The construction-management agreement between the two parties mandated the purchase of subguard insurance by Pavarini McGovern to protect against potential failure to perform by its subcontractors. Over the course of two years, Pavarini McGovern charged Waterscape $200,000 in insurance premiums. In 2008, the concrete subcontractor on the Cassa project, Broadway Concrete, began to default, prompting Waterscape to ask Pavarini McGovern to activate the insurance to cover mounting costs, but the construction company failed to produce a copy of the policy. According to the lawsuit, Pavarini McGovern confessed in June 2009 that there was no such coverage. Although the work was ultimately completed, Waterscape incurred construction delays increasing for other subcontractors and increase costs for Waterscape Resorts costing them $30 million in costs due to construction delays.