UPDATED, 2:24 p.m., Feb. 21: Maefield Development and Fortress Investment Group are buying out their partners Steve Witkoff, Ian Schrager, Howard Lorber’s New Valley and Winthrop Realty Trust in the Marriott Edition hotel under construction in Times Square, The Real Deal has learned. The deal values the property, located at 701 Seventh Avenue, at $1.53 billion.
Winthrop, which is run by Michael Ashner, said in a filing Wednesday with the U.S. Securities and Exchange Commission that the ownership entity signed a contract on Feb. 13 to sell the property to an entity affiliated “with a current indirect member of the sellers.” That member, according to sources familiar with the deal, is said to be Maefield, which is also redeveloping the nearby Palace Theatre site with Fortress and L&L Holding Company.
The investor group led by Witkoff paid $430 million in 2012 for the site, then home to an 11-story office building. They announced plans for a hotel that same year and broke ground in 2015. The project, a 39-story, 452-room Marriott Edition hotel, continued to face delays, due in part to site complications that involved consulting the Metropolitan Transportation Authority, Witkoff said in 2016. The hotel, which is located at the corner of West 47th Street and also has the address of 20 Times Square, is now expected to open this spring.
Maefield and its capital partner Fortress currently have a small interest in the property. Sources said Maefield, for example, has held a “profits interest.” This deal would give the two firms full ownership of 701 Seventh Avenue.
The Maefield deal is expected to close April 30, the filing shows. At the time of closing, Witkoff and Winthrop plan to sign a development services agreement in which they would finish construction on Maefield’s behalf, the filing shows.
Howard Michael’s Carlton Group, which is also an equity partner in the property and a past adviser on the joint-venture ownership, is being bought out as well, sources said.
A Cushman & Wakefield team led by Doug Harmon and Adam Spies is advising the sellers on the deal. The brokers declined to comment, as did the buyer and sellers.
The hotel will also feature 76,000 square feet of retail, including 25,000 square feet leased to the National Football League for a new store.
Maefield, a real estate development firm led by Mark Siffin, is a partner in a massive development at 1568 Broadway. The developers of that project are now in the market for a $1.3 billion construction loan for the project, which will involve the elevation of the historic Palace Theatre, the expansion of the hotel, and the creation of new retail and LED signage. Witkoff and Ashner’s investment fund recently bought a piece of a $75 million mezzanine loan tied to the project, of which JPMorgan is the primary lender.
Fortress, a global investment manager, was acquired by Japanese telecom giant SoftBank for $3.3 billion last year.
Correction: A previous version of this story incorrectly identified the theater being redeveloped at 1568 Broadway. It is Palace Theatre.