Deka, Ashkenazy Buy Marriott New York East Side
- May 29, 2015
By Keith Loria, Contributing Editor
Deka Immobilien and Ashkenazy Acquisition Corp. have partnered in the acquisition of the Marriott New York East Side, a 655-key hotel located in Manhattan’s Midtown East submarket, from Morgan Stanley Real Estate Investing, for $270 million.
JLL’s Hotels & Hospitality Group facilitated the sale.
“It’s a very good asset, almost 100 years old and a staple on the Lexington Corridor so it was very appealing to several groups, both domestic and off-shore,” Gilda Perez-Alvarado, JLL’s executive vice president, told Commercial Property Executive. “The property has room to grow from a performance perspective. It was performing at a significant discount from peak levels so there was a road to recovery and it was an attractive basis.”
Aside from the 655 guestrooms, the Marriott New York East Side consists of eight suites, 18,000 square feet of meeting space, two food and beverage outlets and a 24-hour fitness center.
The hotel is located in Manhattan’s largest office corridor, near top entertainment and cultural attractions.
Marcus & Millichap’s most recent Hospitality Research Market Report notes that the Northeast region’s hotel sector as a whole is primed for modest growth in 2015, and newly built chained hotels in New York City will spark considerable investor interest in the months ahead.
According to Perez-Alvarado, investors are reevaluating the Lexington Corridor from many perspectives.
“There is limited new supply, plus quite a bit of capital going into major properties for repositioning or value add, so the whole neighborhood dynamics were very appealing aspects for the buyer,” she added. “The property is right across the street from the Waldorf Astoria and there is massive redevelopment going on with that specific asset and perpendicular to that is the InterContinental Barclay, which is currently shut down that will reposition the asset as a five-star.”
Both of these renovations are expected to bode well for the future performance of the Marriott East Side, not to mention the improved hospitality market in Manhattan.
“Things are getting better. We are seeing the recovery of the corporate market and the group market and a lot of the hotels on the Lexington Corridor are group houses and have large meeting space,” Perez-Alvarado concluded. “From a supply and demand dynamic, there aren’t very many available sites for development and you also have a key-count reduction by virtue of the partial conversion of the Waldorf Astoria into residential and the Barclay being shut down for a considerable period.”
Savills Studley’s U.S. Cross Border Investment team, led by executive managing director Robert Stamm, advised Deka on the acquisition.