Felcor Lodging Trust has agreed to buy the Morgans and Royalton
hotels from Morgans Hotel Group for $140 million in cash,
marking the firms’ first-ever New York hotel acquisitions.
The Irving, Texas-based real estate investment trust, said it has
been looking to buy in New York and other major markets since
before the downturn, and was able to find two properties at a price
of $496,000 per room, in prime Midtown locations.
“This process basically started in 2006 with the plan to reposition
and improve the overall portfolio quality,” said Stephen Shafer,
vice president at Felcor, noting that the firm acquired the Fairmont
Copley Plaza for $98.5 million in 2010.
The Morgans, a 114-room hotel at 237 Madison Avenue,
underwent a $10.3 million renovation in 2008.
The Royalton, a 168-room property at 44 West 44th Street, saw a $20.2 million renovation in 2007 and spent $1.5 million on a new
lobby bar in 2010.
Felcor said it plans to add guest rooms at both hotels, improve the
food and beverage selections at both properties and upgrade the
fitness center and guest lounge at the Morgans.
Morgans Hotel Group, the Manhattan-based boutique hotel chain
founded by Ian Shrager, said the deal furthers its strategy to
withdraw from hotel ownership and focus on long-term brand
management.
“If it hadn’t been formally announced at least it was on the street
that those properties were up for sale,” said John Fox, senior vice
president at PKF Consulting in New York.
The deal follows a string of recent hotel acquisition in the city.
Late last month, Host Hotels closed on the $313.5 million
acquisition of the Helmsley Hotel, and will reflag the
property under the Westin brand in 2012, following a renovation.
Morgans will continue to manage the property, under a new 15-
year management deal, which includes an option for a 10-year
extension.
Morgans recently completed a deal to get out of its equity stake at
the Hard Rock Hotel & Casino in Las Vegas and turn the property
over to mezzanine lenders.