A Midtown hotel a short walk from Times Square has quietly slipped onto the market after its lender took it back in a foreclosure sale. The 32-story tower has spent years stuck in debt and legal battles, and city records show a nominal $100 transfer value as control shifted to the lender.
According to Crain's New York Business, the leasehold interest in the property at 342 West 40th Street is now being offered for sale after the lender stepped in. Crain's reports that the asset is currently being marketed to potential buyers.
PincusCo, citing city land records, notes that "the transfer value in Acris was $100," with Rialto Capital Advisors recorded as acquiring the leasehold while acting as special servicer and credit bidder for the CMBS trust. PincusCo reports that the transfer closed on Oct. 29, 2024, and was recorded in city records on Dec. 30, 2024.
Foreclosure history
The building’s financial problems date back years. A roughly $40 million loan tied to the property was originated in 2012, and the hotel entered formal foreclosure proceedings after pandemic-era closures, according to The Real Deal. Court filings and coverage show that a receiver was appointed in 2021, and that lenders and mezzanine noteholders have clashed over how the asset was handled as revenue collapsed.
Where this fits in the market
New York’s hotel market has seen some sizable and occasionally distressed trades in recent years, including a $230 million sale of the InterContinental Times Square in late 2025, Bisnow reported. That backdrop helps explain why a Midtown property near Times Square could still attract buyer interest, even with questions about its condition, renovation needs and zoning limits hanging over the prime location.
What to watch next
How the listing is structured, including the asking process, whether the sale runs as a private bid or auction, and which broker, if any, is attached, will signal whether the special servicer is aiming for a full market-rate outcome or a faster distressed exit, Crain's notes. Nearby hotels, investors and local businesses are likely to be watching for what a new owner decides to do next, whether that is reopening, converting or otherwise repositioning the building once control changes hands.
