L
loyd Goldman's luxury resort on Montauk Beach, Gurney's Montauk Resort and Seawater Spa, was a beacon of hope in 2022 as hotel demand slowly recovered from pandemic-era lows. The 149-key resort had undergone a $54 million renovation in 2014, which included the addition of a $16.4 million spa with an indoor swimming pool overlooking the Atlantic Ocean. Despite this, the property's performance faltered, and it landed in special servicing last month after Goldman failed to repay or refinance the $217 million loan tied to the hotel.

    According to Trepp, the transfer was due to an "administrative issue" that delayed the loan extension, which BLDG Chief Operating Officer Justin Kleinman claimed has since been resolved. However, Commercial Real Estate Direct noted that the asset had substantially underperformed expectations, with revenue covering less than half of monthly mortgage payments as of June.

    The decline in performance may be attributed to post-pandemic hospitality trends and the seasonal nature of Montauk's allure. As travel restrictions loosened, airline passengers doubled year over year by 2023, leading to lighter demand for local destinations like Gurney's Montauk. The resort's occupancy rates slipped from 71% in 2021 to 59% in 2023, and its short season likely contributed to cash flow volatility.

    The challenges faced by the resort may have driven BLDG and Metrovest's sale of Montauk Yacht Club in 2023 for a record-breaking $149 million. The partners had also sold Gurney's Newport Resort & Marina just five years after purchase, amid Goldman losing his partner Filopoulos to pancreatic cancer. With two one-year extension options left on the loan, Goldman would need to secure an interest-rate cap to extend the mortgage, which may be a costly pill to swallow given the property's cash flow.