NEW YORK CITY-At first glance, the reason behind the sale Tuesday of 65 W. 36th street would be obvious: profit. After all, seller Hidrock Realty—who first bought the property in late 2001—more than tripled its $8 million dollar investment.
The purchaser, Sioni Group, paid $29 million; plus, Hidrock made another $6 million on the asset earlier this year when it sold about 20,000 square feet of the building's unused air rights to a partnership between insurance firm AIG and real estate firm Buccini Pollin Group, according to Crain's New York Business. The partners used those air rights for a neighboring hotel development now under construction. Sioni did not respond to a request seeking comment.
But Abraham “Abie” Hidary, a principal at Hidrock, tells GlobeSt.com it's also about a fundamental shift at the company. “This is about a $30 million asset and we're focusing on assets above $50 million. We find that the real estate business has become very complicated, like [get your] hands dirty and everything takes a lot of effort and time, so it's better to put our energy into larger assets.”
Further, he notes, there wasn't much else Hidrock could do with the asset. “We already sold the air rights and it's a beautiful building now [it was renovated in 2003]; the value has been extracted. When we're sitting in a deal, we always ask ourselves, “if we don't sell, how much are we making?' We felt all the capital that was in there could be put to better use.”
Hidary declines to say specifically where Hidrock is looking to spend, but notes, “we have a lot of projects, we're very focused on NY. We're building three hotels, one residential building plus we have two retail stores and some office towers, so we're always seeing opportunity. “
The neighborhood around West 36th street, the Garment Center, is thriving, Hidary notes. “It's a phenomenal neighbrobohood that's going to see tremendous growth.” The company likely will partake in that, as it has eight area properties in its portfolio. And this most recent sale is not a harbinger of Hidrock's plans with respect to the other assets.
“Every building we own has its own life cycle, as far as investment,” says Hidary. “This just happened to be an asset we've owned for 11.5 years.”
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
