Kash Group buying Morgans Hotel for condo conversion

Shlomo Bakhash’s firm and Shel Capital in contract to pay $41M for 237 Madison

Jun.June 09, 2017 08:00 AM

From left: Morgans Hotel at 237 Madison, Shlomo Bakhash, FelCor’s Steve Goldman and JLL’s Jeffrey Davis

Shlomo Bakhash’s Kash Group, in partnership with Shel Capital, is in contract to acquire the Morgans Hotel, which it plans to convert into a micro-unit condominium, the firms confirmed to The Real Deal.

Kash and Shel are expected to close next month on the $41 million purchase of the 17-story, 117-key property at 237 Madison Avenue, located between East 37th and 38th streets, in Murray Hill.

The real estate investment firms are converting the hotel into about 90 condo units on the upper floors, as well as a ground-floor restaurant and three floors of either hotel rooms or corporate housing. The micro condo units will average 300 to 325 square feet in size and $700,000 to $750,000 in asking price. There will also be a triplex penthouse condo with an undetermined asking price, Bakhash said. Utilizing 1,500 square feet of extra FAR, the firms plan to slightly expand the property to about 77,000 square feet, he added.

After the hotel and the deal close, Kash and Shel, led by Rony Kravel and Jonathan Bakhash, plan to launch the conversion immediately, they said. The price comes out to about $530 per square foot.

The four-star hotel is one of the assets that Texas-based real estate investment trust FelCor Lodging Trust has been looking to sell. FelCor’s rival, RLJ Lodging Trust, is now in the process of acquiring the REIT. The combined trust would be one of the largest hotel REITs in the U.S.

FelCor announced in May it was in contract to sell the Morgans and Royalton hotels for a combined $92 million to two different buyers. FelCor had acquired the two hotels from Morgans Hotel Group for $140 million total in 2011.

JLL’s Jeffrey Davis, who is brokering the deal, declined to comment, as did FelCor.

The property was constructed in 1927 and, after a renovation in 1984, reopened as the first in the Morgans hotel chain, which was acquired by Sam Nazarian’s SBE Entertainment Group late last year.

Some hotels in the city are having more luck at a sale with a buyer that is planning a conversion. The LeFrak Organization, for example, is buying the Affinia-branded Dumont NYC hotel for nearly $120 million and is planning to convert the hotel rooms to residential.

Related Articles

JLL President and CEO Christian Ulbrich & JLL Global Chief Financial Officer Stephanie Plaines (Credit: iStock, JLL)

JLL still riding revenue wave after HFF acquisition

Glenn Tolchin and Yoav Oelsner (Credit: Jll; Getty Images)

Former JLL brokers launch boutique sales firm

AKS Capital Partners Managing Partners Aaron Appel and Walker & Dunlop CEO Willy Walker

Walker & Dunlop acquires Aaron Appel’s AKS Capital Partners

Clockwise from left: 168-170 Wythe Avenue, 115 North 6th Street and 129-133 Kent Avenue with L3 Capital's Domenic Lanni (Credit: Google Maps)

L3’s Williamsburg retail properties snag $91M refi

Warner Media CEO John Stankey, Google CEO Sundar Pichai and Facebook CEO mark zuckerberg (Credit: Getty Images, iStock)

Triple-digit office rents, once a rarity, are now a major piece of Manhattan deals

Donald Trump and the Trump Hotel in Washington D.C. (Credit: Getty Images)

Deadline is set for bids on Trump’s DC hotel

LCOR’s Anthony Tortora and the parking lot at 1517 Surf Avenue (Credit: Google Maps and LCOR)

California teachers get in on Coney Island’s redevelopment

JLL CEO Christian Ulbrich and 330 Madison Avenue (Credit: JLL and Steel Institute of New York)

JLL doubles office footprint at 330 Madison Avenue