NEW YORK CITY-After disclosing in October that it had entered into an agreement with an unknown buyer for the MetLife Clock Tower building at Five Madison Ave., Africa Israel USA has brought to light the buyer—and its plans for the iconic asset. As it turns out, the 41-story, 267,000-square-foot iconic building sold to a buyer well-placed to redevelop it.
Marriott International bought the property for $165 million and will develop it in partnership with developer Ian Schrager under the Edition brand. The two will also develop other Edition hotels slated for cities such as Bangkok, Abu Dhabi, Los Angeles and Gurgaon, India.
The renovations to the Clock Tower building are scheduled to begin in late 2012, though Marriott says that design work for the space is already underway.
“New York is one of the most important destinations in the world, and we are delighted to have secured the Clock Tower as a singular, iconic structure that will become a flagship for the Edition brand and one of New York’s most compelling places to stay,” Arne Sorenson, Marriott’s president and COO said in a prepared statement. He added that the economy had hampered the rollout of the Edition brand but that Marriott remains “strongly committed to this brand” and dedicated to developing it further. “We are thrilled to add the Clock Tower building to our Edition portfolio.”
Laurie Golub, general counsel and managing director of business affairs at AFI USA, tells GlobeSt.com that the deal represents a home run for both sides. Despite selling the building for less than it was acquired for four years earlier, in light of today’s market, the number achieved was favorable.
“The property was bought in 2007, so in 2011 when we sold the building we looked at $165 million as a strong price for this asset and a continuing success for Africa Israel in maximizing its ability to get value for its assets in this time for the marketplace,” Golub says. “It was a terrific deal for Africa Israel and we’re very pleased with the number we got—we got a very strong price for this asset. And it’s terrific for Marriott because it’s obviously an iconic building and a landmarked building that will be a perfect location for their Edition brand hotel.”
As GlobeSt.com reported, an unnamed buyer was found for the building in the fall of 2011, when a $5 million deposit was put down for it.
Experts say that New York remains under-hoteled, and Golub agrees. “With 40 million tourists coming to New York and a very vibrant tourist market, there is a huge need for hotels,” she says. “A boutique first class brand like Edition will be a welcome neighbor to the Madison Square Park area.”
As of the end of the third quarter of 2011, Marriott had over 105,000 hotel rooms in its development pipeline. Adjusted net income stood at $104 million, a 25% increase compared to the same period a year earlier. The company did not return a phone call from GlobeSt.com in time for publication.
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