New York
Farkas buys Lexington Ave hotel for $185M
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Andrew Farkas lands $155M refi for Lexington Hotel
Hudson Bay Company provided loan for 725-key property
A photo illustration of Island Capital chair Andrew Farkas and 511 Lexington Avenue (Getty, Island Capital, Google Maps)
Andrew Farkas and his partners refinanced a Midtown Manhattan hotel, marking another chapter three years after acquiring the historic property.
Hudson Bay Capital provided a $155 million loan to refinance the 725-key hotel at 511 Lexington Avenue, the Commercial Observer reported. Farkas’ Island Capital Group owns the hotel in partnership with MCR Hotels and Three Wall Capital.
The 28-story property was folded into the Marriott Autograph Collection last year after major renovations. In addition to its hundreds of hotel rooms, the hotel is known for its small collection of specialty suites, including one that housed Marilyn Monroe and Joe DiMaggio.
A Walker & Dunlop team led by Jordan Casella and Aaron Appel arranged the transaction.
Farkas and his partners acquired the property in 2021 for $185 million, when the hotel was still shuttered in the wake of the pandemic. The 1929-built property had last traded hands in 2011, when DiamondRock Hospitality purchased it for $333.7 million. The property, which includes a Starbucks and a Crunch Fitness, gained landmark status in 2016.
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Island Capital tapped into its $350 million Covid fund to make the acquisition, while HPS Investment Partners supplied $125 million in debt.
As tourism returns in New York, it’s a good time to be in the hotel market post-doldrum. At the end of last year demand and profitability surged in the sector after the city cracked down on Airbnbs and short-term rentals, essentially banning them from the Big Apple; daily hotel rates in the market jumped 10 percent year-over-year, according to CoStar.
Farkas’s merchant bank was announced in February as a partner to Infinity Global Real Estate Partners, the venture being launched by former Silverstein Properties CEO Marty Burger after his exit from the firm. That partnership fell apart last month, however, before it was ever formalized.