The Real Deal New York

What’s in a name?: Brokers are taking wait-and-see approach to selling units at a former Ritz-Carlton

A legal battle is unfolding between residents at 10 West Street and owner Westbrook over the name change
By David Jeans | April 20, 2018 07:00AM

The Wagner

Perched at the southern tip of Manhattan, the Wagner at the Battery offers unobstructed panoramas of the city and New York Harbor.

While the views haven’t changed, the name has. And for residents who live above the former Ritz-Carlton hotel, the panorama isn’t enough.

Shortly before the Ritz-Carlton sign was removed from the building, the residential board filed a suit against owner Westbrook Partners over the name change. And as the legal battle ensues, brokers selling condominium units at the property say the new moniker spells uncertainty for the value of the residences.  (The suit comes a week after Westbrook landed a $280 million loan to refinance the Ritz-Carlton at 50 Central Park South, ahead of a planned renovation next year.)

Since opening in 2001, the building — which has 120 condo units and nearly 300 hotel rooms in its 12-story base — was managed by Ritz-Carlton, and branded as such. Millennium Partners sold its interest in the hotel to Westbrook in 2013, and it wasn’t long until the new owner floated plans to shutter the hotel.

The following year, Westbrook sent a letter to the Battery Park City Authority stating its intention to convert the property’s lower 12 floors into more residences, according to documents viewed by The Real Deal. The plans never came to fruition, and now, the residential board is claiming that the firm wants to run the hotel portion of the property “into the ground” to justify a conversion.

“Westbrook is trying to undermine the vitality of the hotel,” said Michael Hiller, an attorney representing the board. “We believe they would rather flip a 100 residences.”

In a response to the lawsuit, filed last week in New York Supreme Court, Westbrook claimed that under years of Ritz-Carlton management, the hotel suffered “millions of dollars” in losses, according to an affidavit filed by its managing principal of hospitality investments, Matt Kenney.

Janice Mac Avoy, an attorney with Fried Frank who is representing Westbrook, said that it was no longer the company’s intention to convert the hotel to residences and the 2014 memo had been “mischaracterized,” but would not elaborate on how. She also declined to specify how much money the hotel lost under Ritz-Carlton’s management.

Furthermore, residents are claiming that under the new name — taken from the adjacent Wagner Park — the hotel is no longer being run as a “nationally-recognized brand, flag or franchise” as specified in the ground lease.

Mac Avoy said that under Westbrook’s new branding company, Leading Hotels of the World, which also does marketing for The Lowell and The Knickerbocker in New York, the conditions of the lease are being met. She added that Highgate Hotels, which manages the Park Central Hotel, will take over the hotel operations.

However, brokers trying to move residential units upstairs are still able to use the Ritz-Carlton brand. The hotel group is still managing the 120 condos at the building, where there are currently 10 units listed for sale with prices starting at $1.95 million, according to StreetEasy.

Warburg Realty’s Herbert Chou, who is representing the owner of the property’s priciest unit at $11 million, said the name-change had not affected his prospects of a sale, and that he expected an offer from an interested buyer within coming weeks.

For one former owner who was looking to buy back into the building six months ago, the removal of the Ritz-Carlton brand from the hotel has prompted him to look elsewhere. The individual, who asked to remain anonymous because of his ties to residents within the building, said he used to entertain guests from overseas at the hotel, with the inclination they would be staying at the Ritz-Carlton hotel.

But some current listings are outdated. Several include images of the old Ritz-Carlton sign on the front of the building. A listing for penthouse 19E still advertises that residents “can enjoy the 24-hour Ritz-Carlton Hotel and the Concierge services seven days a week.”

A broker representing another seller at the property said “only time will tell” if the name change would affect the sales value of his client’s unit. Another said that they had an interested buyer who had not been turned off by the new name.

The brand changeover has also spawned mixed reviews for guests staying downstairs. Several complaints emerged from guests who booked to stay at the Ritz-Carlton, only to learn on arrival the hotel was now called the Wagner at the Battery.

“This is a motel dressed in the 5-star residue from the Ritz,” one person who stayed in the hotel this month wrote on TripAdvisor. And a Swedish couple wrote last week that despite discovering they would not be staying at a Ritz-Carlton, they found it to be a “nice hotel in a perfect area.”