Hotels are changing hands across the country, including the $373-million deal for the Sheraton New York Times Square Hotel.
Sheraton New York Times Square Hotel sold
Host Hotels & Resorts Inc. has sold the 1,780-room Sheraton New York Times Square Hotel for approximately $373 million to MCR and Island Capital Group LLC.
The purchase price for the 1,780-room hotel (pictured above) equates to $210,000 per guestroom, which is one of the lowest prices per guestroom paid for fee-simple hotel real estate in Manhattan in the past 13 years.
The property is the third-largest hotel in New York City by room count. The property opened in 1962 as the Americana and became part of the Sheraton hotel brand in 1979. With 62,000 sq. ft. of event space, it has hosted many of the city’s most coveted events and most recently hosted the New York Democratic Convention.
The EBITDA multiple includes approximately $136 million of estimated foregone capital expenditures over the next five years. In connection with the sale, the company is providing a $250 million bridge loan to the purchaser.
James F. Risoleo, president/CEO, Host Hotels & Resorts, said, “The sale of the Sheraton New York Times Square Hotel represents another important step in the transformation of our portfolio as we look to deploy capital into assets that will bolster our EBITDA growth profile. Since the beginning of 2021, we have invested $1.6 billion in early-cycle acquisitions, and we have disposed of eight hotels at a value of $1.4 billion, including amounts due under seller financing. The blended EBITDA multiple on our seven hotel acquisitions is 13.0x, which compares favorably to the 17.7x EBITDA multiple, including estimated foregone capital expenditures, on our eight hotel dispositions.”
The acquisition of the Sheraton New York Times Square Hotel follows Island Capital and MCR’s successful joint venture acquisition of The Lexington Hotel, Autograph Collection, a historic 725-room hotel. Between The Lexington Hotel and the Sheraton New York Times Square, Island Capital and MCR have acquired more than 2,500 guestrooms in New York City together. On a standalone basis, MCR operates more than 5,000 rooms in the New York City area, which includes properties such as The TWA Hotel at JFK Airport, The High Line Hotel, Royalton New York, Ink48 Hotel and The New Yorker.
“The Sheraton New York Times Square Hotel is a landmark property that we are committed to enhancing and modernizing over the coming months to make it a go-to destination when traveling for business or pleasure,” said Andrew L. Farkas, CEO, Island Capital. “We are excited to continue building our lodging and hospitality footprint in New York City alongside MCR, and we are confident that the city’s hospitality industry will continue to bounce back.”
Tyler Morse, chairman/CEO, MCR, added, “We are delighted to be working with Marriott to position The Sheraton New York Times Square Hotel as one of New York City’s premier destinations and one of the flagship hotels for the Sheraton brand in the U.S. and globally. The Sheraton New York Times Square Hotel is the gateway to Times Square and a New York City icon. We believe in investing in New York, and we are proud to have kept our eight New York City area hotels open and the teams employed over the past two years. New York is open for business.”
The Sheraton New York Times Square Hotel will remain part of the Sheraton brand family under a new long-term franchise agreement and will be managed by MCR. Island Capital and MCR intend to invest more than $100 million in the hotel’s rooms, banquet areas and public spaces.
Pebblebrook Hotel Trust to acquire Inn on Fifth in Naples, FL
Pebblebrook Hotel Trust has executed a contract to acquire the 119-room Inn on Fifth in Naples, FL for $156 million.
Upon completion of the acquisition, Pebblebrook will retain Noble House Hotels & Resorts to manage this independent luxury resort property at the center of Historic Downtown Naples. The purchase is expected to be completed by the end of the second quarter and is subject to customary closing conditions. The company offers no assurances that this acquisition will be completed on these terms or at all.
The resort property includes 119 guestrooms across two buildings (the Main and Club Level buildings), including 43 suites. The Club Level Building features 32 suites, a private rooftop with a jacuzzi and an exclusive private lounge serving breakfast, cocktails, beverages, snacks and hors d’oeuvres. The Main Building features the remaining 87 guestrooms and suites, as well as more than 10,000 sq. ft. of recently renovated indoor and outdoor flexible meeting space, a 3,600-sq.-ft outdoor pool deck providing food and beverage service, a day spa and a fitness center. All guests of Inn on Fifth have access to 12 tennis courts at the adjacent Cambier Park Arthur Allen Tennis Center. The hotel also includes more than 21,000 sq. ft. of ground-level retail spaces, all currently leased and occupied.
“We are extremely excited to acquire this premier Naples landmark resort in the high barrier-to-entry Naples market,” said Jon E. Bortz, chairman/president/CEO, Pebblebrook Hotel Trust. “The Inn on Fifth exemplifies South Florida’s effortless blend of upscale, laid-back luxury and was developed flawlessly and cared for meticulously by the current owner. This unique leisure-focused property is centrally located at the main intersection of Old Naples and is surrounded by over 30 restaurants, cafés, art galleries and boutiques. The Inn on Fifth is well-positioned to benefit from Naples’ ongoing growth and desirability as an exclusive destination along South Florida’s Gulf Coast. In addition, Noble House’s expertise and track record in managing and marketing luxury hotels, including our LaPlaya Beach Resort & Club, should create tremendous value and operating synergies for the Inn on Fifth. The resort will also become part of Curator Hotel & Resort Collection, which is expected to generate a wide array of expense reductions combined with enhanced technology and operating initiatives.”
Pebblebrook is evaluating numerous operating and physical enhancements for additional upside and increased cash flow, including a development opportunity on the highly desirable 0.6-acre parcel adjacent to the hotel’s Main Building that is part of the acquisition.
The acquisition of Inn on Fifth would bring the total number of properties in the company’s portfolio to 54, including 12 unique drive-to, independent lifestyle resorts and six properties in South Florida.
The company intends to fund the acquisition with approximately $78 million of cash and intends to issue to the seller approximately $77.6 million of perpetual preferred operating partnership units (3.104 million units at $25 per unit) with an annual distribution rate of 6% and approximately $400,000 of common units.
Arbor Lodging Partners purchases two hotels in Ann Arbor, MI
Chicago-based hotel investment and management company Arbor Lodging Partners has acquired a two-hotel portfolio consisting of the Hilton Garden Inn Ann Arbor and the TownePlace Suites by Marriott Ann Arbor in Michigan.
Located near the University of Michigan’s main campus, the Hilton Garden Inn Ann Arbor will undergo a comprehensive renovation that will touch on all components of the hotel, and the TownePlace Suites by Marriott Ann Arbor, which was recently renovated, will undergo some light work.
DSH Hotel Advisors arranges sale of Quality Inn at International Drive Orlando
DSH Hotel Advisors, a national hotel brokerage and advisory firm headquartered in Tampa, FL, has arranged the sale of the Quality Inn at International Drive Orlando, FL for an undisclosed price.
DSH Hotel Advisors represented the seller, Sun Vista Hotels III LLC, and Ahmed Kabani, Luis Garino and Suraj Dalal with Marcus & Millichap represented the buyer, HKB Investment Group.
The Quality Inn is positioned in a prime location within Orlando—situated off International Drive within walking distance to multiple world-class demand generators. The property is across the street from ICON Park and approximately two miles away from Universal Studios Florida, SeaWorld Orlando, Universal CityWalk and Orange County Convention Center.
DSH Hotel Advisors held the exclusive listing with the seller and the property was sold confidentially.
Mumford Company completes sale of Kentucky Residence Inn
Mumford Company has completed the sale of the Residence Inn by Marriott Paducah in Kentucky. The company has now completed six transactions on behalf of the selling group, Musselman Hotels. OM Hospitality LLC, a lodging owner and operator in the Southeast and Midwest, purchased the 74-unit hotel. The purchasers plan significant renovation and will retain the hotel’s affiliation as a Residence Inn.
Facilitating this transaction were Steve Kirby, managing principal in the firm’s Atlanta office; Ed James, managing principal in the firm’s Newport News, VA, headquarters; and George Arvanitis, managing director-Midwest for Mumford’s Chicago office.
Kirby said, “This is the fifth decade, over three companies, where I have had the opportunity to transact with the Musselman family, and it has always been a pleasure. It is also exciting to develop a relationship with new buyer groups. We wish them much success with this opportunity and to working together in the future.”