The seller of one of New York City’s largest hotels suffered an even greater loss on the deal than was initially reported.
Host Hotels & Resorts unloaded the Sheraton New York Times Square Hotel to MCR Investors for $323 million, according to property records filed Tuesday.
It was reported in March that MCR acquired the 1,780-room hotel for $356 million, or $33 million more than the actual price.
The sale represents a humbling haircut for Host, which purchased the 51-story hotel for $738 million in 2006, when the economy was humming and New York City tourism was in the midst of an unprecedented rise.
Still, MCR’s purchase of the property, at 811 7th Avenue in Midtown, is New York City’s largest hotel deal in about two years.
The Times Square Sheraton opened 60 years ago and stands as the third-largest hotel by room count in New York City. It hosted the New York Democratic Convention in February.
Host attempted to sell the hotel for up to $550 million in 2018 with help from Eastdil Secured. Two years later, in the first year of the pandemic, Host acknowledged that the value of the property had dropped to $495 million. But that proved to be optimistic as business travel has yet to reach pre-Covid levels and perhaps never will.
MCR, a hotel owner and operator, has not shied away from acquiring properties during the pandemic, despite the struggles of the sector and tourism at large. Two years ago, the company acquired the storied Royalton Hotel in Midtown Manhattan from hotel operator Highgate and real estate investment firm Rockpoint Group for $40.8 million.
MCR was also part of a joint venture, along with Andrew Farkas’ Island Capital and Three Wall Capital, that acquired the shuttered Lexington Hotel in Midtown Manhattan last year for $185 million.
MCR owns 140 hotels across 37 states. Other New York City properties in its portfolio include the TWA Hotel, the High Line Hotel and the New Yorker.
The hotel industry is expected to continue recovering this year, but is unlikely to reach pre-pandemic levels before 2024. A forecast from the Hotel & Lodging Association and Kalibri Labs estimated New York City hotels would reap $2 billion from business travel this year, less than half of the $4.5 billion they made in 2019.