Marriott revealed as $165M buyer of Madison Square clocktower
October 26, 2011 08:30AM
Ian Schrager appears to be returning to the clock tower at 5 Madison Avenue.
According to Real Estate Weekly, Marriott International purchased the 220,000-square-foot office tower overlooking Madison Square Park from Africa Israel and plans to turn it into an Edition Hotel, the boutique hotel line it launched with hotelier Ian Schrager. Africa Israel was previously reported to have sold the tower for $165 million, but the buyer was only identified as "a credit-worthy" one.
Though Marriott typically does not own its real estate, the hotel operator wants to buy property for its struggling Edition line, which it hopes will compete with Starwood's W Hotel brand, to help get it off the ground. Marriott had planned to open 100 such hotels within ten years of the 2007 launch, according to the Wall Street Journal, but just two have opened thus far and one, in Hawaii, dropped the Edition moniker. Marriott has $400 million plans to open Editions in Miami Beach and London.
But both the Journal and Real Estate Weekly note that there will be challenges to building a successful hotel in the clock tower. A hotel conversion could reduce the amount of usable square feet to 150,000, Real Estate Weekly said, while the Journal noted that there was limited space for the lobby, restaurant and other amenities.
Schrager had partnered with Aby Rosen to buy a controlling stake in the building from SL Green, but turned around and sold it to Africa Israel in 2007 for $200 million. Africa Israel was near a deal with Tommy Hilfiger for the building, but the designer backed out. [WSJ] and [REW]
http://www.rew-online.com/2011/10/26/marriott-to-buy-clock-tower-at-5-madison/
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NOT BUYING
Mr. Hilfiger's $170 million plan to purchase the Madison Square landmark and convert it a hotel is called off after he fails to secure financing. Seller Africa Israel left in lurch again.
Fashion designer Tommy Hilfiger has called off plans to purchase the Clock Tower, the landmarked office tower overlooking Madison Square Park. He had intended to convert it into a luxury hotel and condominium.
Earlier
Not everything is on time at the MetLife Clock Tower (Metropolitan Life Tower) – at least not concerning its proposed sale. Designed by architect Napoleon LeBrun and modeled after St. Mark’s Campanile in Venice, this landmark NYC property was expected to get a new look. With the help of Tommy Hilfiger, famous designer, JSR Capital, and a $170 million price tag, the 5 Madison Avenue building was supposed to change from clock tower to a luxury hotel and condominium.
Clock Tower Conversion
The conversion would address the current boutique hotel craze and attract a youthful, affluent crowd. Yet Hilfiger's plan to convert the MetLife Clock Tower into his first hotel seems to have hit a snag. According to inside sources, the popular designer is having problems closing the deal.
Property Investors
Just a few weeks ago, Hilfiger and JSR Capital signed the contract to acquire the century-old property near Madison Square Park. The seller, developer Africa Israel USA, and Hilfiger seem to have run into a few issues. In fact, Africa Israel is reported to be talking with other real estate investors about the clock tower property.
An Africa Israel spokeswoman clarified the situation, "Africa Israel continues to be in negotiations to sell the Clock Tower, including with the party that has signed the contract."
In 2007, Lev Leviev's Africa-Israel bought the building for $200 million. At that time, the diamond billionaire was buying up landmarks sight unseen in New York City.
Closing the Deal
Even though insiders say that Hilfiger and Africa Israel have not closed the deal, the sources have not determined the reason for the delay. It is public knowledge, however, that Africa Israel has to settle a previous agreement with fashion designer Versace. In 2008, the developer hired Versace to redesign the interiors of the Clock Tower. Originally, Africa Israel had plans to convert the tower to 55 ultra-luxury condos priced at $3,500 per square foot.
The market collapsed though and Africa Israel decided not to use Versace. Actually, Africa Israel and Versace are still negotiating the termination of that agreement. Such unresolved matters can wreak havoc with a pending sale.
Lending Concern
As well, despite the improvement in the NYC hotel industry, lenders can be wary about financing huge ventures. Lenders might be more agreeable if a veteran manager wants to turn around an existing property. The financial institutions are more cautious about funding new developments or extensive conversions.
Conversion Issues
The MetLife Clock Tower was the tallest building of its kind at the time of its construction in 1909. The office layout of this 50-storey building overlooking Madison Square Park might pose a problem for conversion. The project might be complicated and costly – even adding up to several tens of millions of dollars before completion.
Since Hilfiger has no track record for running hotels, industry executives figured that he would team with an established operator. Hilfiger is still a principal designer of his company. He sold the business, however, 14 months ago to Phillips-Van Heusen Corp for $3 billion. The parent company is not involved in the hotel project.
Hotel Brands
Reports suggest that Hilfiger always wanted to launch a hotel brand in New York City. Apparently, Hilfiger and JSR Capital (led by Jona Rechnitz, former director of acquisitions at Africa Israel) had considered other NYC properties including the Hotel Chelsea and the former New York Times building on West 43rd Street. Initially, Hilfiger and JSR Capital placed a bid of almost $110 million for eight floors in the New York Times property. Later, the team changed their minds about the bid. It is up in the air about how Hilfiger's involvement in the clock tower purchase would affect his long-time ambition about developing a hotel brand.
Hilfiger's Hotel Designs May Unravel
Other relate Article
MetLife ClockTower A Possible Hotel Conversion
MetLife ClockTower A Possible Hotel Conversion at Madison Avenue and East 24th Street.
Tommy Hilfiger, the designer known for his blue blazers and varsity sweaters, has signed a contract to buy the landmark Metropolitan Life clock tower for $170 million and plans to convert the building into a hotel, according to an executive briefed on the deal.Enlarge This ImageMichael Appleton for The New York TimesThe Metropolitan Life tower was once the world's tallest.
Mr. Hilfiger, who sold his apparel company 14 months ago to Phillips-Van Heusen for $3 billion, had been scouring the city for a suitable building for almost a year. He had looked at the former headquarters of The New York Times on West 43rd Street before moving south to the clock tower, which overlooks Madison Square Park.
In recent years, a string of developers have sought to convert the MetLife tower, at Madison Avenue and East 24th Street, which was modeled after St. Mark’s Campanile in Venice, to condominiums. Mr. Hilfiger has another idea: a hotel.
Mr. Hilfiger would not be the first clothier to turn to hotels. Giorgio Armani has his name on, and is said to be designing, a chain of luxury hotels, starting with the Armani Hotel Dubai, in the United Arab Emirates.
The former MetLife clocktower at 5 Madison Avenue, the grand old gal standing guard over Madison Square Park, has been sold by troubled developer Lev Leviev for $170 million.
To Tommy Hilfiger. Who may turn the building into a hotel. That's what the Wall Street Journal thinks, and folks, we are reeling. The Madison Avenue jewel was purchased by Leviev's Africa-Israel for $200 million 2007, back when the diamond billionaire was buying up New York City landmarks sight unseen. Previous plans had called for turning the clocktower into an Ian Schrager hotel, but Leviev decided on 55 ultra-luxury condos. Designed by Versace. Priced at $3,500 a foot. For Russians and "top celebrities" only. Those were the days, eh?
More on New York Times - Wall Street Journal - NY Curbed
NOT BUYING
Mr. Hilfiger's $170 million plan to purchase the Madison Square landmark and convert it a hotel is called off after he fails to secure financing. Seller Africa Israel left in lurch again.
Fashion designer Tommy Hilfiger has called off plans to purchase the Clock Tower, the landmarked office tower overlooking Madison Square Park. He had intended to convert it into a luxury hotel and condominium.
Mr. Hilfiger, along with partner JSR Capital, a real estate investment company, wanted to redevelop the 41-story spire at 5 Madison Ave. into what would have been the preppy designer's first-ever hotel project. According to published reports, the partners were in contract to buy the 267,000-square-foot property for $170 million from Africa Israel USA. Sources said the deal fell apart because the would-be buyers had trouble raising the needed funds.
JSR Capital, however, insisted that there were other reasons for walking away from the deal.
“Virtually everyone in the real estate business has looked at Clock Tower as a hotel, residential, and/or office,” said Ari Schwebel, vice president of operations at JSR Capital. “Some of those were even all-cash buyers. There are reasons not one of them has closed on the building, and it isn't about financing.”
Spokespeople for Mr. Hilfiger did not return a call seeking comment, while a spokeswoman for Africa Israel declined to comment.
Article Source: http://www.crainsnewyork.com/article/20110914/REAL_ESTATE/110919950&template=printart
$600 million hotel and condominium tower at 50 West Street Back To Life
139-room hotel
The big and shiny Helmut Jahn hotel/condo combo at 50 West Street is back from the dead and
getting ready to rise just south of the World Trade Center site. The plan from West Street Development LLC, 65 stories growing 714 feet into the downtown sky above the Brooklyn Battery Tunnel, first came to light back in 2008, but it skidded to a stop along with the economy.
Now a permit for the new building ( http://a810-bisweb.nyc.gov/bisweb/WorkPermitDataServlet?allisn=0002250551&allisn2=00 00607607&allbin=1087661&requestid=2 ) has been issued to the architect of record, Gruzen Samton Architects. But this is still Helmut's baby and his design, described by some as a ginormous silver sex toy, can be seen on the Murphy Jahn website, where it's tagged as the "Time Equities Tower." But don't let the mundane name fool yo
http://wirednewyork.com/forum/showthread.php?t=13821&page=28
http://ny.curbed.com/tags/helmut-jahn
170 Broadway sold for over $60 million
A trio of firms, including giant asset manager Carlyle Group, will turn the 108-year-old office building into a hotel, joining seven others currently in the works downtown.
A trio of firms has purchased 170 Broadway in lower Manhattan and plan to turn the
office building into a hotel, sources familiar with the deal said.
The partnership, comprised of Highgate Hotels, Crown Acquisitions and The Carlyle Group, bought the 165,000-square-foot building between Liberty Street and Maiden Lane for about $60 million, and will put at approximately $40 million into the conversion. The seller of the 108-year-old, 18-story property was AMG Realty Partners, which is part of GE Capital. Representatives from the buyers didn't return calls for comment, while a GE Capital spokesperson didn't have an immediate comment
Read more: http://www.crainsnewyork.com/article/20110915/REAL_ESTATE/110919937#ixzz1Y9SUesAI
Source: http://therealdeal.com/newyork/articles/tribeca-associates-set-to-purchase-170-broadway-from-amg-realty-part-of-downtown-hotel-boom-which-includes-24-john-street-32-pearl-street-53-ann-street-and-87-chambers-streetLower Manhattan has been a hotbed of hotel development as the neighborhood has rebounded from the terror attacks of a decade ago. There are now 18 hotels in the area, triple the number open in 2001, according to the Alliance for Downtown New York. Aside from the new project at 170 Broadway, there are at least another seven hotels in various stages of development downtown.
Despite the shaky economy, tourism remains strong in the city, even though room rates are off their highs.
In 2011, had its best year ever, reaching a record high of $3.5 billion in dollar volume, reports Jones Lang LaSalle Hotels. The number accounts for a total of 18 transactions and represents a 150-percent increase over the $1.4 billion in hotel transactions recorded in 2010. The number also shattered JLL's prediction of $2.4 billion worth of hotel deals for 2011.
"New York transaction activity in 2011 was driven by the perfect combination of strong operating fundamentals, quality product being brought to market and unprecedented real estate investment trust appetite," said Arthur Adler, managing director and Americas CEO of Jones Lang LaSalle Hotels.
Real Deal reports that "New York was the most liquid hotel market in the world, and totaled 20 percent of the country’s entire hotel sales volume." JLL expects New York to retain its crown in 2012, though REITs may still be on the sidelines if their stock prices don't jump.
Institutional investors and private equity firms will contribute to the 12 hotels trades JLL expects for 2012, which should total between $2.2 billion and $2.6 billion—approximately 15 percent of America’s total—the firm forecasts.
One of the larger transactions of 2011 was HEI Hotels & Resorts' sale of the Algonquin Hotel, which is part of Marriott's Autograph Collection.
- In June, Gehr Development purchased the Four Points by Sheraton Midtown Times Square for almost $112 million ($460,000 per room).
- FelCor Lodging Trust closed a $140 million sale with New York City-based Morgans Hotel Group. The deal involved the 20-story, 114-room Morgans Hotel and 168-room Royalton Hotel.
- In May, DiamondRock Hospitality agreed to buy the Radisson Lexington Hotel from seller, Lexington Hotel Real Estate LLC, for $335 million ($477,888 per room). In addition, DiamondRock agreed to purchase the former Knickerbocker Hotel at 1466 Broadway from Highgate Holdings, for between $112.5 million and $135 million.
2012 is off to a fast start. LaSalle Hotel Properties kicked off the new year by purchasing the Park Central Hotel for $396.2 million.
Source:
http://www.hotelnewsnow.com/articles.aspx/7418/NYC-hotel-transactions-hit-US$35b-in-2011
Optimism abounds about the New York City hotel industry. The buzz about the business of Manhattan hotels is not just made up of empty words. Four fundamental reasons provide the basis of the excitement around the thriving hotel industry in the Big Apple.
Reasons for Optimism about New York City Hotels
1. Statistics show the overall popularity of U.S. hotels.
At the ALIS conference near the end of January, Smith Travel presented their 2010 overview results. As well, they declared their predictions for 2011-2012 in the U.S. hotel industry. The study contained impressive figures.
In fact, the 2010 review noted that 52,000 U.S. hotels added up to a room supply of 1.7 billion rooms – and a 2% rise in supply since 2009. Although the figures across the country look promising, the highest performers will be in major centers such as New York City.
2. There is a staggering demand for New York City hotel rooms.
During 2010, investors saw the rate of demand rise 7.8% for U.S. hotel rooms. Considering last year's transaction numbers and new hotel developments, guests experienced no shortage of 'places to stay' in the US. Yet due to the growing number of hotel rooms, occupancy increased just 5.7% to 57.6% - lower than the preferred 60%.
Within thriving centers, occupancy rates were higher - even reaching 88.4% in New York City. Smith Travel noted that 2011 and 2012 growth is not expected to exceed 2010 levels. Yet demand growth will be almost 2% each year. Of course, industry officials do not expect to see a similar rise to 2010 levels in the near future.
3. Strong ADR and RevPAR growth are predicted for 2011-2012 in U.S. hotels.
During 2010, the average daily rate (ADR) across the country did not grow in dramatic proportions compared to demand rates. Actually, ADR was flat (in fact, down) at $98. Keep in mind that $100 is a favorable number for ADR. Yet 2011 and 2012 are expected to have strong RevPAR and ADR rates.
RevPAR rose 5.5% in 2010 to $56.50 and room revenues increased 7.6% to $99.5 billion. When the U.S. hotel industry improves, places like New York City improve even more. TOP Hotel Brokers of NYC made reference to this fact in their December 2010 report - "Buying Hotel Growth in NYC - Investors' Strategy for Growth - Manhattan Hotel Real Estate."
"The RevPAR is measured for 50 U.S. hotels used in PKF-HR statistics. Of course, New York is the star of this show. If New York City is removed from the equation, the RevPAR forecast drops from 6.4%-5.4%." ~ "Buying Hotel Growth in NYC - Investors' Strategy for Growth - Manhattan Hotel Real Estate."
4. The STR Chain Scale Outlook predicts positive changes.
The STR Chain Scale Outlook suggests improvements in the NYC hotel market on different levels. This encouraging prediction indicates a rise in occupancy, ADR, and RevPAR for varied hotel brands. STR mentions hotels from economy to luxury brands.
New York City offers all types of accommodations including 'midscale' and 'upper upscale' hotels. The Big Apple is in a perfect position to shine in the coming year. The fundamentals point to plenty of reasons to be optimistic about NYC hotels.
7 Reasons why The NYC Hotel Industry is a Sizzling Hot Market
Without a doubt, the New York City hotel industry is a hot market. Recently, Colliers PKF Hospitality Research named the Big Apple as the best performing U.S. market. This study defines leading markets as ones with the greatest compound annual revenue-per-available-room growth rates from 2010 to 2014. Various reasons make New York City deserving of its top position.
Why is the NYC Hotel Industry a Hot Market?
1. For the past two years, New York City has been named as the top U.S. tourist destination.
2. Since the Big Apple is a global center, the city is a magnet for corporate travelers.
3. Generally, hotel development is a profitable venture. Within a thriving metropolis, there are even greater possibilities for profit.
4. High occupancy rates are driving the NYC hotel industry.
According to a March 2010 report by STR Global, New York had the highest occupancy rate (88.4%) of the top 25 U.S. markets. Just look at even one development group and you can get an idea of the popularity of NYC hotels. At present, Kimpton Hotel and Restaurant Group LLC own several luxury hotels in New York City. The Eventi in Chelsea, The Muse in Times Square, and 70 Park Avenue Hotel are included among their NYC properties. Yet recently, the company announced plans to build ten more hotels in New York City within the next ten years.
Michael Depatie, Kimpton CEO, explained their reasoning to Bloomberg BusinessWeek.
"Demand in that city is frankly insane,” said Depatie. “We’re focused on areas in Manhattan where you typically don’t have many hotels, like the Meatpacking District, Chelsea, or Tribeca.”
Recent transactions give credence to Depatie's comments about the state of the NYC hotel industry. Business is booming in the Big Apple. From DiamondRock Hospitality Company's development at West 42nd Street in Times Square to the sale and planned renovation of the New York Helmsley, this city has a dynamic hotel industry.
5. New York City is a prime location for luxury real estate. The luxury market always rebounds quickly after an economic downturn.
6. The city's zoning department seems willing to accommodate large developments.
A few areas of New York City that will be seeing new hotel developments were zoned originally as industrial commercial areas. Hot spots like Chelsea and Tribeca have been rezoned to encourage development. On January 25, Choice Hotels International announced that one of the first two Cambria Suites in New York would open in Chelsea by 2013. (The other Cambria Suites will be located in Times Square). As well, Kimpton Hotels will be taking advantage of these blossoming markets.
7. New York City hotels are a smart investment.
Room costs have increased more in New York than anywhere else in the US. By March 2010, the revenue per available room had increased 19.1% from December 2009 to $178.60 a night on average. The rate rose another 8.2 per % in December 2010 – the largest U.S. increase.
At present, the average rate for a NYC hotel room is $276.07. One simple reason why the New York hotel industry is such a sizzling hot market - it makes for successful business.
The Algonquin Hotel, the landmarked, 174-room property that's been bought and sold four times in the last 15 years, may be about to change hands once again.
The Algonquin Hotel | 59 West 44th Street | Between Fifth and Sixth Avenues | New York, NY 10036
http://www.marriott.com/hotels/travel/nycak-the-algonquin-hotel-autograph-collection/
The Autograph Collection by Marriott features unique and historic hotels in New York. Stay at the Algonquin Hotel, Autograph Collection
According to the Post, HEI Hotels & Resorts is negotiating to sell the 59 West 44th Street property to Cornerstone Real Estate Advisers, a Mass Mutual-owned investment group that manages 37 hotels and has a debt portfolio of 34 loans on 45 hotels.
The Algonquin -- famous for its feline mascot (Mathilda now has her own email address), and for the one-time daily Round Table writers' meetings begun by Dorothy Parker, Robert Benchley and Robert Sherwood -- last changed hands in 2005 for $74 million, or $425,000 per room.
HEI's $35 million mortgage on the property was on a Real Estate Alert watch list last year, when the hotel also joined the Marriott brand as part of its Autograph collection.
Room rates for this weekend range from $229 to $359 per night. [Post]
The Hotel Highlands at Five Points South, an Ascend Collection hotel Birmingham, Ala.
The Hotel Highland at Five Points South, an Ascend Collection hotel is situated in the historic Southside within walking distance of Birmingham's premier restaurants and entertainment district.
CitizenM Hotel - Brack brings another hotel to Lower East Side
185-191 Bowery Street - 315 rooms
Coming hot on the heels of Brack Capital's Hotel Indigo Orchard Street Hell Building's future rebirth as a Hotel Indigo, Dutch hotel chain CitizenM is planning a "budget luxury" hotel at the site which rests on Bowery and Delancey Streets
The gimmicky hotel is marketed towards "mobile citizens of the world" who seek "affordable luxury for the people." And this affordably luxurious hotel is going to be big. We're talking 315 rooms scattered across 90,000 square feet big.
So get ready for some construction beginning within the coming months and the project completed by next year.
Source: http://ny.curbed.com/archives/2011/05/23/massive_colorchanging_dutch_hotel_coming_to_the_bowery.php
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