Some investors are seizing on the opportunity to snatch up hotels at significant discounts.
Ashford Hospitality Trust Inc. has sold its 310-room hotel at 60 West 37th Street in the Garment District to Magna Hospitality Group for $115 million, according to property records. That’s a 41 percent discount to the $195 million the real estate investment trust paid for the Embassy Suites hotel 18 months ago.
Similarly, hotel operator Highgate and real estate investment firm Rockpoint Group sold the storied Royalton Hotel for $40.8 million — a roughly 25 percent discount to the $55 million the partners paid for the property at 44 West 44th Street in 2017. MCR — which also owns the TWA Hotel at John F. Kennedy airport and the 150-room Courtyard by Marriott in downtown Newark among others in the area — is the buyer.
Ashford, Magna Hospitality, MCR, Highgate and Rockpoint did not reply to requests for comment.
For Ashford, its purchase of the Embassy Suites hotel was intended to be the Dallas-based firm’s entrée into New York real estate. But after the coronavirus ground the city’s travel economy to a halt, the hotel buckled under the weight of its debt. Ashford became two months delinquent on the CMBS loan behind the property after the debt was transferred to special servicing in May, according to the data firm Trepp.
In the first quarter of this year, the hotel had a net operating loss of $1.7 million compared to operating income of $7.35 million in the full year of 2019.
Adrian de Gortari, whose LinkedIn page lists him as vice president of revenue management at Rhode Island-based Magna Hospitality, signed the transaction documents for the buyer. In his profile, de Gortari lists himself as a former professor of revenue management at New York University and consultant for Hilton Worldwide. On its website, Magna Hospitality describes itself as an opportunistic hotel real estate investment firm.
For the Royalton, it’s not the first time the storied hotel has traded at a discount. Highgate and Rockpoint had purchased the property from Felcor Lodging, a Texas-based firm that pumped millions of dollars of renovations into the hotel, for $55 million in 2017. Felcor paid $80 million in 2011 to buy the property from Morgans Hotel Group.
Before that, it was owned by hotelier Ian Schrager, who snapped up the property in 1988 and invested in making it a dining destination.
At that point, the hotel was a hot spot for business lunches and meetings. In the late 1990s, Stephen Green met there with Marc Holliday to plan out the future of his firm, SL Green Realty.