$10m hotel sold for conversion to housing.
The price is believed to be the highest paid per room for a hotel of its type in Nassau County, according to Ralph J. Trionfo, president of Upside Ventures, the sole broker in the transaction.
"The existing structure lends itself flawlessly to a conversion," said Trionfo. "The rooms will be combined, and the ground floor restaurant and ballrooms will be converted into attractive retail space."
This is the first sale in 19 years for the seller, HKKW Hotel LP, an affiliate of Applecore Hotels, who has owned and managed the building as a hotel since 1985.
John Lynch of John R. Lynch, PC, in Mineola, and Chris Coschignano of Chris Coschignano, PC, in Syosset, represented the seller and buyer respectively.
The 225,000-square-foot, eight-story, full-service hotel has 182 rooms and the largest ballroom in Nassau County. It will be converted to 106 subsidized one-bedroom apartments, 29,000 square feet of retail and 240 parking spaces.
The property is centrally located in Nassau County, 15 miles from JFK Airport, convenient to Nassau Coliseum, Jones Beach and the Roosevelt Field Shopping Center, and within walking distance of the Long Island Railroad.
"This is absolutely the highest and best use for the property," said Trionfo. "The property had outlived its original purpose and no longer works as a hotel. Now it will help the seniors of the community with a new housing facility and shopping destination. I'm sure the residents and village officials will be pleased to see this facility take on a new image."
The hotel had flourished up until recently when in addition to the effects of 9/11, it had to compete with newer hotels and lack of demand in the Hempstead area.
The property had been on and off the market until the fall of 2003 when Trionfo acquired the assignment to handle the marketing and sales efforts for Applecore.
"We launched a national marketing campaign, but there was little interest from operators seeking to maintain the property as a hotel," said Trionfo.
"Using a selective marketing approach, we identified a qualified buyer, assisted them with pre due-diligence and delivered a solid contract to the seller with a significant non-refundable deposit at contract signing. The hotel was on the market for less than 90 days."
The buyer is a local developer with whom Trionfo has completed transactions in the past. The developer aggressively pursued the asset because he had an alternate use in mind:
To provide the village of Hempstead with quality housing for its seniors on the upper floors with complementary retail units on the ground floor. According to published reports, there is a strong demand for senior housing in the area, and the Village of Hempstead has a waiting list of over 3,200 people.
"The deal was not structured subject to financing or a zoning change, but we needed time to work out the details while being sensitive to the ongoing enterprise," said Trionfo.
"I've brokered and converted many buildings as a principal, but this involved closing down an ongoing business with reservations in place, terminating the franchise and dealing with employees.
"Both parties were professional and pleasant to work with," said Trionfo. "In the end, I made the transaction work for both. The seller was able to book rooms and functions, while the buyer sought the necessary zoning variance to change its use.
"The buyer also purchased a solid building for $45 per square foot, favorable construction and acquisition financing from the Town of Hempstead Industrial Development Agency (IDA) and guaranteed income from the government," said Trionfo.
While under contract the buyer also obtained a contract from the Department of Housing and Urban Development (HUD) for all the units, which guarantees that low-income residents pay no more than 30 percent of their total income.
In addition, the project qualified for a tax pilot program. There will be no tax reduction on the property for 13 years, which was a major concern for the town.
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|Publication:||Real Estate Weekly|
|Date:||Sep 29, 2004|
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