When the Lexington Hotel reopens next month, it will be under new ownership: Andrew Farkas’ Island Capital has acquired the property for $185 million.
The real estate merchant bank on Tuesday announced the purchase of the shuttered hotel in a joint venture with Three Wall Capital and MCR. The latter will manage operations under the Marriott International Autograph Collection brand.
The seller was DiamondRock Hospitality, which bought the hotel 10 years ago for $333.7 million.
The 725-room hotel in the heart of Midtown opened in 1929 and was given landmark status in 2016. It has been closed since the pandemic hit New York City in March 2020. The Commercial Observer reported that it is set to reopen on Aug. 1.
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“The Lexington Hotel is one of the grandest properties in New York City and combines a wonderful legacy with world-class modern-day amenities that will appeal to a deep pool of potential guests traveling for business or pleasure,” Farkas, the CEO of Island Capital, said in a release.
The hotel has served as the home for the likes of Marilyn Monroe and Joe DiMaggio, as well as the Hawaiian Room and Chateau Madrid.
Other nearby hotels, including the Waldorf, the Roosevelt and the Maxwell, are also closed, either for renovation or permanently, giving the Lexington an opportunity to seize tourist dollars as visitors begin to trickle back to the city. It is located near several transportation hubs and could benefit from the reopening of Broadway and the U.S. Open tennis tournament in the coming months.
HPS Investment Partners supplied $125 million in debt for the purchase, according to the Commercial Observer. Island Capital dipped into its $350 million Covid fund for the purchase, its first investment with the fund.
The CBRE recently forecast that the city’s hotel industry would not recover until 2025. Around a third of the hotel room inventory in the city has been mothballed by the pandemic.
With the purchase, Farkas is betting on a comeback.
“We are doing our part to be a significant part of that recovery and we are well-positioned to capitalize on the return of New York’s booming hospitality industry,” he said.