Financing available for select New York City hotels

By Michael Stoler | October 20, 2008 09:06PM

After nearly a year of searching for financing, the owners of The Plaza Hotel last week was able to secure funding for the hotel portion of the landmark icon, including unsold condo hotel units.

Elad Properties and Kingdom Holding, owners of The Luxury Plaza hotel managed by Fairmont Hotels & Resorts, secured financing by a syndicate of lenders led by HSBC. The financing was arranged as a senior loan for approximately $200 million, and a mezzanine loan in the range of $45 million. The 282-room hotel includes 130 hotel rooms and 152 condo hotel units. The Plaza also has a separate residential portion with 182 private condos.

Last week, Hersha Hospitality Trust, secured financing for the construction of a 120-room all-suite boutique hotel at the corner of East 48th Street and Lexington Avenue.

Earlier this year, Hersha acquired and opened three new hotels in New York City. In July, the REIT opened the Nu Hotel, Downtown Brooklyn’s first boutique hotel at 85 Smith. In January, it acquired the 45-room, Duane Street Hotel in Tribeca, and in June, it purchased the 150-room, Sheraton JFK Airport.

This summer, the owner of the 131-room Surrey Hotel, at 20 East 76th Street, obtained $77.5 million in financing for the acquisition of the land lease and renovation of the hotel. In September, the hotel owner — the Denihan Hospitality Group — began a liquidation sale of the hotel’s contents. After undergoing extensive renovation, the hotel is expected to reopen in the fall of 2009.

Two hotel properties which were expected to be sold may be in a state of limbo due to a lack of financing. These properties are the famed Helmsley Park Lane hotel on Central Park South and the Buckingham Hotel at the corner of 57th Street and Sixth Avenue.

Michael Stoler is a columnist for The Real Deal and host of real estate programs “The Stoler Report” on CUNY TV and “Building New York” on WEGTV in East Hampton. His radio show, “The Michael Stoler Real Estate Report,” airs on 1010 WINS on Saturdays and Sundays. Stoler is also an adjunct professor at NYU Real Estate Institute and a senior principal at Apollo Real Estate Advisors. He is a former columnist for the New York Sun.

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