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<\/p>\nA growing number of owners who have held on to their luxury New York City hotels through the pain of the past five years have had enough.<\/p>\n
<\/p>\n
\n NYC hotel sales have surpassed $1B since July 1, but many trades have come at a significant discount.\n <\/p>\n
Upscale properties, like the New York Edition, The Chatwal and the NoMo SoHo hotel, have all sold for millions less than their owners paid to acquire them in recent months, indicative that\u00a0a recent\u00a0uptick in transactions is being driven in part by sellers with few better options.<\/p>\n
\u201cThere’s still distressed debt here in the city,\u201d Hotel Association of New York City<\/a> President and CEO Vijay Dandapani<\/a> said. \u201cThat’s what’s prompting these people to just get out and cut their losses.\u201d<\/p>\n The sales market has kicked into gear, with $1.1B of hotel trades since July 1, according to STR data shared with Bisnow. That figure doesn’t include Mori Trust’s $541M acquisition<\/a> of 35 Hudson Yards and its 212-room Equinox Hotel, which closed this week five months after Related Cos. and Oxford Properties listed it for $600M.<\/p>\n The dollar volume is more than twice\u00a0that of\u00a0the first half of the year and already outpaces the second half of 2024 by 11%, when NYC hotel trades totaled $973M.\u00a0<\/p>\n The\u00a0deals are being fueled by investors smelling potential in the city\u2019s best hotels as some owners look for the exit amid high costs and increasingly stringent regulations, industry insiders told Bisnow.<\/p>\n \u201cIn some of these trades, we have to think about the larger commercial real estate capital allocation game,\u201d said Jan Freitag<\/a>, senior vice president of lodging insights for STR<\/a>. \u201cMaybe we are the belle of the ball right now.\u201d<\/p>\n All but one of the hotels to trade since the start of the third quarter\u00a0have more\u00a0than 100 rooms and are classified as luxury, upper upscale or upscale properties. Seven of the 12 hotels sold since July 1 traded for $100M or more.\u00a0<\/p>\n \u201cI don’t know if the sellers are happier with the prices,\u201d CoStar Director of Hospitality Market Analytics Didio Pequeno said. \u201cThe buyers, I think, are a little more interested in the prices now.\u201d<\/p>\n The Abu Dhabi Investment Authority sold the 271-room New York Edition at 5 Madison Ave. last month for $235M, a 30% discount from the $336.7M it paid in 2015 and $36M less than the reported asking price<\/a> when it was listed last year.\u00a0<\/p>\n The 264-key NoMo SoHo at 9 Crosby St. is being sold out of bankruptcy<\/a>\u00a0with an expected price of $125M, roughly 40% less than the Sapir Corp. paid for it in 2015. And Vanbarton Group in August sold the Smyth Tribeca at 85 W. Broadway to Capstone Equities for $39.8M, a 45% price chop.<\/p>\n Forced sales are happening as pressure increases from banks, which are demanding owners either inject new equity or sell the properties to pay off the debt, Freitag said.<\/p>\n One prominent example is The Chatwal, a luxury Midtown hotel whose owner, Dubai businessman Iyer Vaidyanathan Narayan, died last year. The property had been the subject of a foreclosure action from its lender last year, The Real Deal reported<\/a>.\u00a0Investor Ben-Josef Group Holdings acquired the 76-key property for $53.2M, compared to the $60M the seller spent in 2014.<\/p>\n \n The New York Edition, in a clocktower building overlooking Madison Square Park, sold for $235M in October.\n <\/p>\n Some longtime owners of Manhattan hotels are simply looking to get out of the market rather than swallow the cost of upgrading properties, a typical request of lenders in talks to refinance mortgages, Dandapani said.\u00a0<\/p>\n \u201cThe operating costs are so high that you just [are] not seeing the valuation that you should otherwise have got,\u201d Dandapani said.<\/p>\n A major factor driving costs higher<\/a> is the Safe Hotels Act<\/a>, multiple industry\u00a0sources said.\u00a0The act, which went into effect in January,\u00a0requires union labor and direct hiring of roles previously filled by contractors.<\/p>\n But fundamentals in Manhattan\u2019s hotels have improved. In September and October, for the first time since the pandemic, the average revenue per available room in the New York City hotel market was higher than in 2019 after adjusting for inflation, Dandapani said.\u00a0<\/p>\n Beneath the top-line numbers, the market is being lifted by luxury hotels<\/a>, which are significantly outperforming the lower-cost lodging options in the city. That dynamic is catching investors\u2019 attention, adding the hotel sector as another area of the economy that\u2019s seeing a K-shaped recovery<\/a>, Freitag said.<\/p>\n \u201cLuxury has really been the only place to hide for investors,\u201d he said. \u201cWe’re seeing that the upper end of the market is doing either well or really well, and everybody else everywhere else is not OK.\u201d<\/p>\n Hotel investors also are looking to capitalize on some political tailwinds reducing hotel competition, JLL Senior Director of Hotels and Hospitality Carolina Bernal said.<\/p>\n Local Law 18<\/a>, a policy known as the \u201cAirbnb ban,\u201d has all but eliminated the short-term rental market in the city. Additionally, developers have been required since 2021 to obtain a special permit from the city to build a new hotel, which has restricted incoming supply.<\/p>\n \u201cWe have no new supply, and fundamentals in New York City have never been better,\u201d Eastdil Secured<\/a> Managing Director Jeff Davis said.<\/p>\n Plus, some owners have taken advantage of a pandemic-era policy cemented into law in 2023<\/a> that allows for converting hotels<\/a> to residential and office<\/a>, taking more supply offline.<\/p>\n \u201cThe supply story in New York is really helping the trajectory of the market,\u201d Bernal said. \u201cInvestors are really, really starting to see how well performance is going.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"A growing number of owners who have held on to their luxury New York City hotels through the…\n","protected":false},"author":3,"featured_media":396692,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5122],"tags":[188162,188161,5229,188157,132587,188156,188163,188158,188159,40809,79358,188166,405,403,5226,5225,5228,5227,181482,188165,24647,188160,67,586,132,5230,68,2969,146899,188164],"class_list":{"0":"post-396691","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-new-york","8":"tag-35-hudson-yards","9":"tag-abu-dhabi-investment-authority","10":"tag-america","11":"tag-capstone-equities","12":"tag-costar-group","13":"tag-eastdil-secured","14":"tag-hotel-association-of-new-york-city","15":"tag-jan-freitag","16":"tag-jeff-davis","17":"tag-jll","18":"tag-local-law-18","19":"tag-mori-trust","20":"tag-new-york","21":"tag-new-york-city","22":"tag-newyork","23":"tag-newyorkcity","24":"tag-ny","25":"tag-nyc","26":"tag-nyc-hotels","27":"tag-safe-hotels-act","28":"tag-str","29":"tag-union-labor","30":"tag-united-states","31":"tag-united-states-of-america","32":"tag-unitedstates","33":"tag-unitedstatesofamerica","34":"tag-us","35":"tag-usa","36":"tag-vanbarton-group","37":"tag-vijay-dandapani"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115592827186383175","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/396691","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=396691"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/396691\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/396692"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=396691"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=396691"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=396691"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}<\/p>\n