NYC’s Essex House Sells to Strategic Hotels for $362M
By Scott Baltic, Contributing Editor
A joint venture of Strategic Hotels & Resorts, of Chicago, and an affiliate of KSL Capital Partners L.L.C. has closed on its purchase of the iconic Essex House Hotel in Manhattan’s Central Park South, it was announced late Friday. The gross purchase price was reportedly about $362.3 million.
Strategic Hotels owns 51 percent of the JV and serves as the managing member and asset manager. The debt portion of the acquisition was funded by a $190 million first mortgage originated by Bank of America.
The seller was DIG EH Hotel L.L.C., of Dubai, UAE, to whom Mark Edelstein, Jeffrey Temple, Keith Print and James Pincow of Morrison & Foerster provided legal counsel. SNR Denton was counsel to KSL Capital Partners. The hotel, which had been branded under the Jumeirah Group, will be immediately reflagged as a JW Marriott, with Marriott International taking over operations as of today.
Jones Lang LaSalle Hotels, of New York, arranged the sale on behalf of Dubai Group; the team was led by Arthur Adler, managing director and CEO of Jones Lang LaSalle Hotels, Americas; managing director Jeffrey Davis; and senior vice president Gilda Perez-Alvarado.
The firm also secured the acquisition financing on behalf of the Strategic Hotels joint venture. Mathew Comfort, executive vice president of JLL’s Real Estate Investment Banking group, led that team.
The 40-story, 509-room Essex House underwent a $90 million renovation in 2007 and features a full-service spa and fitness center, a fine-dining restaurant, and meeting and event spaces. Work is to begin immediately on $18.3 million in additional improvements; no details regarding the improvements were available at press time.
According to JLL’s Adler, the Essex House attracted strong interest from investors globally because of its Central Park South location, its reputation and the extremely high quality of its guest rooms and public spaces.
“We expect the New York hotel market to be the leading market for investments in the United States,” said Adler, “as evidenced by the year-to-date deal volume, which has reached $1.2 billion. Overall in 2012, acquisition activity is expected to reach $2.4 billion, equaling the second most liquid year on record.”
“The overall New York market experienced a 6.1 percent RevPAR jump through year-to-date July 2012,” he added, “and still ranks as the number-one market in terms of overall RevPAR.”