Kash Group buying Morgans Hotel for condo conversion
Shlomo Bakhash’s firm and Shel Capital in contract to pay $41M for 237 Madison
Shlomo Bakhash’s Kash Group, in partnership with Shel Capital, is in contract to acquire the Morgans Hotel, which it plans to convert into a micro-unit condominium, the firms confirmed to The Real Deal.
Kash and Shel are expected to close next month on the $41 million purchase of the 17-story, 117-key property at 237 Madison Avenue, located between East 37th and 38th streets, in Murray Hill.
The real estate investment firms are converting the hotel into about 90 condo units on the upper floors, as well as a ground-floor restaurant and three floors of either hotel rooms or corporate housing. The micro condo units will average 300 to 325 square feet in size and $700,000 to $750,000 in asking price. There will also be a triplex penthouse condo with an undetermined asking price, Bakhash said. Utilizing 1,500 square feet of extra FAR, the firms plan to slightly expand the property to about 77,000 square feet, he added.
After the hotel and the deal close, Kash and Shel, led by Rony Kravel and Jonathan Bakhash, plan to launch the conversion immediately, they said. The price comes out to about $530 per square foot.
The four-star hotel is one of the assets that Texas-based real estate investment trust FelCor Lodging Trust has been looking to sell. FelCor’s rival, RLJ Lodging Trust, is now in the process of acquiring the REIT. The combined trust would be one of the largest hotel REITs in the U.S.
FelCor announced in May it was in contract to sell the Morgans and Royalton hotels for a combined $92 million to two different buyers. FelCor had acquired the two hotels from Morgans Hotel Group for $140 million total in 2011.
JLL’s Jeffrey Davis, who is brokering the deal, declined to comment, as did FelCor.
The property was constructed in 1927 and, after a renovation in 1984, reopened as the first in the Morgans hotel chain, which was acquired by Sam Nazarian’s SBE Entertainment Group late last year.
Some hotels in the city are having more luck at a sale with a buyer that is planning a conversion. The LeFrak Organization, for example, is buying the Affinia-branded Dumont NYC hotel for nearly $120 million and is planning to convert the hotel rooms to residential.