Following the disposition of eight hotels for $1.4 billion in 2021, real estate investment trust Host Hotels & Resorts announced this week it sold the Sheraton New York Times Square for $373 million to a joint venture between MCR and Island Capital Group, according to a news release.
Host is providing a $250 million bridge loan to the joint venture in connection to this deal.
According to CoStar data, this is among the highest sale prices for individual hotels recorded since the start of the year. A news release from MCR states the per-room sale price, $210,000, is one of the lowest paid in Manhattan over the past 13 years.
The deal was previously reported in March, citing data from Green Street, with a sale price of $356 million. The property last sold in 2006 for $738 million, and Host attempted to sell the hotel in 2018 for $550 million but realized the fair market value of the property had slipped to $495 million.
In the most recent news release, Host President and CEO Jim Risoleo said the sale of this hotel represents "another important step in the transformation of our portfolio as we look to deploy capital into assets that will bolster" its earnings before interest, taxes, depreciation and amortization growth profile.
In addition to selling off eight hotels, Host at the start of 2021 also invested $1.6 billion in "early-cycle acquisitions." Host has also been active in forming a joint venture with vertically integrated real estate investment manager Noble Investment Group, purchasing a 49% interest in Noble's asset management platform.
Risoleo said during an earnings call in the first quarter that Host views the investment in Noble as a way to increase the EBITDA growth profile of its portfolio by investing in select-service and extended-stay hotels as well as new development deals.
"We remain optimistic about the future of travel, and we are focused on continuing to improve the quality, revenue and profitability metrics of our iconic and irreplaceable portfolio," he said in the release.
Sales that Host completed in the first quarter include the W Hollywood for $193 million; and a five-hotel portfolio comprised of the Westfields Marriott Washington Dulles, San Ramon Marriott, The Westin Buckhead Atlanta, The Westin Los Angeles Airport and The Whitley for $551 million. The company also sold the Sheraton Boston for $233 million.
Host currently owns 74 properties in the U.S. and five internationally, totaling 42,600 rooms.
Prior to the acquisition of the Sheraton New York Times Square Hotel, MCR and Island Capital Group together in June 2021 purchased the 725-room Lexington Hotel, Autograph Collection, in Midtown Manhattan for $183 million, or $255,586 per room, according to CoStar data. In total, Island Capital and MCR together have purchased more than 2,500 guestrooms in New York City.
"The Sheraton New York Times Square Hotel is a landmark property that we are committed to enhancing and modernizing over the coming months to make it a go-to destination when traveling for business or pleasure," said Andrew L. Farkas, chief executive officer of Island Capital, in a news release.
"We are delighted to be working with Marriott to position The Sheraton New York Times Square Hotel as one of New York City's premier destinations and one of the flagship hotels for the Sheraton brand in the United States and globally," said Tyler Morse, chairman and chief executive officer of MCR, in the same release.
MCR currently has a portfolio of 140 branded hotels and Island Capital Group has a diverse platform of commercial real estate services.