Sam Chang and the Holiday Inn Express at 126 Water Street

Hotelier Sam Chang has unloaded the Holiday Inn Express at 126 Water Street in Lower Manhattan for $36.7 million, Real Estate Weekly reported. The buyer was a subsidiary of Hersha Hospitality, for which this will be the 15th hotel in New York City. Chang, who runs the McSam Hotel Group, had purchased the property for $9.5 million in 2005 when it was a two-story retail and restaurant space. The 26-story, 112-room hotel that now stands in its place was completed during the summer of 2010, but by November, the property had been hit with a lis pendens, which marks the beginning of the foreclosure process. [REW] Comments

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Sam Chang and his Holiday Inn Express

Prolific hotel developer Sam Chang of the McSam Hotel Group will be opening a Holiday Inn Express in the Financial District. The 26-story, 112-unit hotel will be located at 124-126 Water Street, at the corner of Water Street and Wall Street, in close proximity to the New York Stock Exchange. The hotel is among the first Holiday Inns to open in Lower Manhattan with the brand’s new signage, created to give the chain a more contemporary image. More than 3,300 Holiday Inn and Holiday Inn Express properties are expected to be relaunched by the end of 2010, and more than 2,500 of the hotels have
already been relaunched to date. TRD

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From left: Sam Chang and the three hotels at 343, 339 and 337 West 39th Street, respectively

Prolific hotel developer Sam Chang sold a trio of attached hotels south of Times Square to Pennsylvania-based hotel owner Hersha Hospitality Trust for $164.5 million.

The three buildings at 337, 339 and 343 West 39th Street, between Seventh and Eighth avenues, were constructed together, but operate under different flags.

All three properties went into contract in November and closed Feb. 9, city property records published today show.

Hersha Hospitality raised $110 million for the purchase of the 184-room Hampton Inn at 337 West 39th Street which sold for $55.9 million and the 188-room Candlewood Suites at 339 West 39th Street for $50.8 million.
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Occupancy and average daily rates are on the rise for New York City hotels, as well as the velocity of sales of hotels in New York City.

New York City posted the largest occupancy increase among the top 25 markets, rising 15.9 percent to 65.5 percent, according to Smith Travel Research data for the week ending Feb. 6.

So far this year, Pennsylvania-based Hersha Hospitality Trust and a Northern Mariana Islands-based alone have purchased five New York City hotels.

Hersha, owner of upscale, mid-scale and extended stay hotels, announced that it closed on the acquisition of three newly-opened hotels in Times Square. The company acquired the Hampton Inn, Candlewood Suites and Holiday Inn Express Times Square. The total price for the three Times Square properties was $165 million, including 1.5 million units of limited partnership interests that were issued to the sellers.

Jay Shah, CEO of Hersha, said, “We were able to acquire the Holiday Inn Express in Times Square for an incremental $55 million, thereby lowering our basis for the three hotels to approximately $284,000 per key, which is below replacement cost and is expected to further increase our initial cash yield on the investment.” [more]

Sam Chang is selling the Hampton Inn at 337 West 39th Street and the Candlewood Suites at 339 West 39th Street

Hersha Hospitality Trust, a Pennsylvania real estate investment trust, plans to spend $110 million it raised as part of a public offering last week to buy two Midtown hotels developed by Sam Chang, according to an announcement from the investment company last week.

Hersha will pay $54.3 million for the purchase of the 184-room Hampton Inn at 337 West 39th Street and $55.5 million for the 188-room Candlewood Suites next door at 339 West 39th Street, documents filed with the U.S. Securities and Exchange Commission show.

The purchase price of $110 million for the 372 rooms comes to a cost of $295,698 per room. The two hotels, as well as a third hotel, a 210-room Holiday Inn Express at 343 West 39th Street, all between Eighth and Ninth avenues, were developed by Chang’s McSam Hotel Group and opened in July 2009, and were expected to be sold together last summer to Hersha. Chang said in an interview today his company was still operating the third hotel at 343 West 39th Street, which remained available for sale. And he said he will not make money on the sale of the two hotels when they do close. “Pretty much we probably broke even. Maybe lost a little money,” he said. [more]

Sam Chang, a prominent budget hotelier, has been hit with a subpoena as part of a state attorney general’s office investigation into the construction contractor he used to build at least six of his 37 New York City hotels. The company, EMC Contracting, is alleged to have underpaid immigrant workers who were forced to work 70-hour weeks, and to have calculated their wages based on race. A civil suit filed by Attorney General Andrew Cuomo this month charges that EMC paid white workers $25 per hour, while black workers were paid $18 and Latino workers got $15. The investigation began after a protest by EMC workers got out of hand at a Chang construction site in 2006. Chang, who owns properties like the Holiday Inn Express, Hampton Inn, and Comfort Inn, will be required to provide records, documents, and correspondence relevant to his relationship with the company, and to testify on Nov. 11. Chang told the New York Times that he knows very little about the case, and that he stopped hiring EMC for his projects after the 2006 incident, but the subpoenas show that action could be taken against him and his companies.