Pebblebrook, Denihan Complete JV on $910M NYC Hotel Portfolio
- Aug 02, 2011
August 2, 2011
By Barbra Murray, Contributing Editor
Pebblebrook Hotel Trust and Denihan Hospitality Group have wrapped up a joint venture that recapitalized a portfolio of six Denihan-owned hotels valued at $910 million. The hotels, all falling into the upscale and upper-upscale categories, are located in Midtown Manhattan.
The group of assets, accounting for an aggregate 1,730 guestrooms, encompasses The Benjamin; Affinia Shelburne; Affinia Dumont; Affinia Gardens; Affinia 50; and Affinia Manhattan. The assigned value of the portfolio includes $596.6 million of existing debt consisting of a non-recourse first mortgage and a mezzanine loan.
As per terms of the transaction, Pebblebrook’s $153.6 million equity investment gives the lodging REIT a 49 percent stake in hotels, leaving Denihan as majority owner with the remaining 51 percent.
“We believe there is tremendous opportunity in the U.S. hotel market right now, and our joint venture with Pebblebrook perfectly positions Denihan for immediate and long-term growth,” Patrick Denihan, co-owner and co-CEO of Denihan, said.
For Pebblebrook’s part, the partnership allowed the company to make its long-desired entrée into the New York City market. “Manhattan has been, and we expect that it will continue to be, one of the most unique and dynamic hotel markets in the United States,” Jon Bortz, chairman and CEO of Pebblebrook, said. “New York City has exceptionally strong and diverse demand drivers, making it an important global market for corporate transient and group demand, as well as a highly popular year-round leisure destination for domestic and international travelers.”
Pebblebrook is just one of many investment entities that are keen on the New York City lodging market. Manhattan is leading the country in investment sales, hotel real estate services company Domain Properties notes in its summer 2011 market report. Year-to-date, sales total more than $1 billion, or 25 percent of the country’s high-quality urban hotel trade volume. The proof is in the price tag; the average cost of hotel properties sold in the Big Apple presently stands at approximately $500,000 per room.