Midtown hotel portfolio sale suggests big value drop

Sonesta picks up four properties from Denihan at apparently large discount

New York /
Apr.April 28, 2022 05:15 PM
Sonesta's John Murray along with the Benjamin Hotel (front left), the Shelburne Hotel & Suites (front right), the Fifty Hotel & Suites (back left) and the Garden Suites Hotel (back right) (Google Maps, Sonesta)

Sonesta’s John Murray along with the Benjamin Hotel (front left), the Shelburne Hotel & Suites (front right), the Fifty Hotel & Suites (back left) and the Garden Suites Hotel (back right) (Google Maps, Sonesta)

A portfolio of four Manhattan hotels traded hands in a deal that could reflect how far property values have fallen in the struggling sector.

Massachusetts-based Sonesta International Hotels purchased the Benjamin, the Shelburne Hotel & Suites, the Gardens Suites Hotel and the Fifty Hotel & Suites from Denihan Hospitality Group, the company announced Wednesday.

The price was not disclosed, but lender Ramsfield Hospitality Finance announced that it provided Sonesta with a $239 million acquisition loan for the deal. The amount suggests the portfolio’s value has dropped significantly.

Back in 2016, Denihan refinanced the four hotels with a $320 million loan from Goldman Sachs. If Goldman and Ramsfield financed the portfolio at the same loan-to-value ratio, that would indicate a roughly 25 percent decline in its value.

Sonesta, which previously owned the Plaza Hotel, is the eighth largest hotel company in the country.

“For Sonesta, this investment marks a significant milestone in our growth as we re-enter the New York City market, which is one of the largest and most dynamic markets in the world,” company CEO John Murray said in an announcement.

Representatives from Sonesta and Denihan did not respond to requests for comment on the deal. A spokesperson for Ramsfield declined to comment on the price. [Editor’s note: Property records later revealed the price to be $324 million.]

Denihan is retaining a minority interest in the properties.

The Sonesta purchase is the latest hotel deal indicating that values in New York City continue to struggle, even as other parts of the country recover.

Hotel owner-operator MCR in March agreed to buy one of the city’s largest hotels — the 1,780-key New York Times Square from Host Hotels & Resorts — for $356 million. That’s less than half the $738 million it sold for in 2006.

Nationwide, hotel values have climbed 18 percent from March of last year, according to Real Capital Analytics. Investors optimistic about hotels’ recovery spent more than $12.5 billion acquiring properties in the first three months of the year, the highest for a first quarter since 2016.

But leisure travel is leading the recovery. Business travel — which hotels in New York and other big cities rely on — isn’t expected to return to normal until 2024, according to the Hotel & Lodging Association.





    Related Articles

    arrow_forward_ios
    Clockwise from top left: 162 West 13th Street, 325 Avenue Y in Brooklyn, 1281 Viele Avenue in the Bronx (Credit: Google Maps)
    Here’s what the $10M-$30M NYC investment sales market looked like last week
    Here’s what the $10M-$30M NYC investment sales market looked like last week
    Aby Rosen and Jay Penske in front of 475 Fifth Avenue (LoopNet, Getty Images, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
    Aby Rosen teams up with Rolling Stone publisher on $290M office deal
    Aby Rosen teams up with Rolling Stone publisher on $290M office deal
    New York skyline
    Rising interest rates will dampen city’s investment sales market this year
    Rising interest rates will dampen city’s investment sales market this year
    Legion Investment Group's Victor Sigoura and 26 East 84th Street (Getty Images, Google Maps, iStock)
    Old-guard landlords cash out in Manhattan, Bronx multifamily deals
    Old-guard landlords cash out in Manhattan, Bronx multifamily deals
    331 Elmora Avenue and 103 Ryan Street (Kislak Realty)
    Tri-state deal roundup: Multifamily, industrial still hot
    Tri-state deal roundup: Multifamily, industrial still hot
    From left: Michael Dell, Alex Rodriguez and Donald Trump along with the Trump Hotel in Washington, D.C. (Getty Images, The Trump Organization, iStock)
    Firm that manages Michael Dell’s wealth finances deal for Trump Hotel
    Firm that manages Michael Dell’s wealth finances deal for Trump Hotel
    Capstone Equities' Joshua Zamir and Renwick Hotel at 118 East 40th Street (TripAdvisor)
    New owner Capstone revives Midtown’s Renwick Hotel
    New owner Capstone revives Midtown’s Renwick Hotel
    Brookfield's Brian Kingston (Brookfield, Brookfield Asset Management, Public domain, via Wikimedia Commons, Google Maps, iStock, Illustration by Kevin Cifuentes for The Real Deal)
    Brookfield’s $25M Queens warehouse deal tops another slow week for i-sales
    Brookfield’s $25M Queens warehouse deal tops another slow week for i-sales
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...