Crowne Plaza sold for $362M; G&E to manage office/retail.
Executive managing director, Frank Mancini, will head up a team that will include John McGinley, Robert Yaffa and Henry Goldfarb to manage and lease the 180,000 s/f of office space and 13,000 s/f of ground floor retail.
The InterContinental Hotels Group will continue to operate the 770-room hotel under a long-term management contract.
The City Investment Fund (CIF) bought the hotel from KG Land New York, a subsidiary of The New Real Property Corporation, a Japan based real estate company that built it in 1989.
The 46-story building includes 26,000 s/f of meeting space, 180,000 s/f of office space, a 29,000 s/f health club and 13,000 s/f of ground floor retail, including Hershey's Times Square, exterior signage and an underground parking facility.
"We are thrilled to have acquired such an iconic asset in the heart of Times Square," said Joseph M. Zuber, chief investment officer of The City Investment Fund, which was formed in 2004 and capitalized primarily through financial commitments from the New York City and State Pensions Systems.
The sale price equates to roughly $470,000 per key, just under half the record sum netted by Related and its partner, Starwood, when they sold the landmark W Hotel on Union Square for the benchmark $1 million a key to the insatiable Istithmar last month.
The Dubai firm is on a buying trajectory right now and is rumored to be negotiating a second deal with Related, this time for the Mandarin Oriental in the Time Warner Center, which Related co-owns with Apollo. Any deal there, market watchers say, could ultimately usurp the already unprecedented pricing levels the city has witnessed this year.
Eric Lewis, head of the hospitality and gaming group at Cushman & Wakefield, commented, "The W Hotel sale is a significant high watermark for the city and for the country as well. It's one of only a few other properties in history that have traded at that level, the others being Hawaiian resort-type properties."
Lewis said the city's hotel market is probably the most attractive in the world right now considering the very good supply and demand fundamentals and the barriers to entry on the island.
He sees no sign of the current feeding frenzy in the hotel sector abating, adding, "There's been a large volume of transaction activity at this point and I would expect that to even increase in the near term as market fundamentals continue to be excellent and investors' appetite for hotel product remains strong."
Meanwhile, the City Investment Fund is planning a $40 million improvement plan at the Crowne Plaza. The office portion is currently fully leased to American Management Association, an executive training company, and media firm, Creative Group. Retail tenants include Hershey's chocolate and New York Sports Club.
CIF is co-managed by The Morgan Stanley Real Estate Funds (MSREF), an affiliate of Morgan Stanley, and Fisher Brothers.
Mortgage financing for the Crowne Plaza deal was provided by Morgan Stanley Mortgage Capital.
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|Publication:||Real Estate Weekly|
|Article Type:||Correction notice|
|Date:||Nov 22, 2006|
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