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.]
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Loss of $21B in business travel to dampen hotel recovery
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.