NEW YORK CITY-Starwood Hotels & Resorts, a global owner/manager of hotel franchises, has disposed of one of its most visible Midtown assets. A joint venture of Rockpoint Group, Goldman Sachs’ Real Estate Principal Investment Area and Highgate Hotels have acquired the Manhattan at Times Square Hotel for $275 million in an all-cash transaction, according to a statement from the Stamford, CT-based company.
Simon Turner, president of global development at Starwood Hotels, says the sale was consistent with the company’s strategy of selling off non-core properties. “As we continue our transition to an asset-light model, we continue to look for opportunities to sell our owned hotels at attractive prices to best create value for our shareholders, and this sale of a non-strategic asset is consistent with that strategy,” Turner says, in a statement.
In 2010, Starwood removed the Sheraton flag from the Times Square property as part of the company’s ongoing commitment to the revitalization of the Sheraton brand in North America and began a "rigorous process" to evaluate all value-maximization options for the asset, Turner says. “With all nine of our brands already well-represented in New York City across approximately 9,000 rooms, we believe this sale presented the best value for our shareholders,” he adds.
People familiar with the transaction say Highgate will manage the 665-room property as an independent hotel unaffiliated with Starwood, while Rockpoint – the controlling majority partner – will handle all major strategic asset level decisions. A spokeswoman for Goldman Sachs tells GlobeSt.com that Goldman will act as an equity partner in the venture and take a minority stake in the hotel. It is located at 1656 Broadway on Seventh Avenue between 51st and 52nd Streets.
The deal is considerably notable for Boston-based Rockpoint, which also has interests in Milford Plaza, One SoHo Square and Eastgate Tower in Manhattan. The company invests through a series of closed-end comingled funds focused on a set of target markets -- New York being one of them -- and property types, including office, hospitality and multifamily. It also recently sold the Park Central Hotel, 299 Park Avenue and Park Avenue Plaza in the city.
According to data from Real Capital Analytics, the deal equates to $413,534 per unit. But unnamed sources say the bulk of the transaction was based on the value of the parking garage and the retail components of the asset. Sources say the hotel -- not including the retail or garage -- was bought out for $250,000 a key.
The site was marketed by Starwood as "Midtown's last great development site," the people say. The hotel can accomodate an additional 600,000 square feet under current zoning or up to one million square feet by purchasing transferable development air rights from nearby properties.
Eastdil Secured served as the seller's broker on the transaction, according to RCA.
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