Hawkins Way, Värde buy defunct Marriott East Side hotel
Property could be turned into student housing
Hawkins Way Capital has picked up another shuttered hotel on Manhattan’s East Side.
The Beverly Hills–based company and the investment firm Värde Partners acquired the former New York Marriott East Side hotel at 525 Lexington Avenue in Midtown, according to a press release. The price was not disclosed.
The seller was German fund operator Deka Immobilien Investment GmbH, a subsidiary of DekaBank, The Real Deal has learned. The press release was first reported by the New York Business Journal.
JLL’s Jeff Davis brokered the deal on behalf of Deka. Neither Hawkins Way nor Värde responded to a request for comment by press time.
Hawkins Way managing partner Ross Walker said in a statement that the property “represents a compelling opportunity to increase our footprint in the heart of Manhattan at a favorable basis,” a possible reference to the price being low.
The acquisition marks the ninth property that Hawkins has bought in the past 15 months, with the deals totaling more than 3,500 units and over $1.3 billion as part of a student housing and hospitality play.
It’s unclear what Hawkins and Värde have in mind for the Lexington Avenue property, but sources with knowledge of the deal said it could be student housing.
Hawkins manages a $2.5 billion nationwide portfolio that includes 5,700 units and 9,500 beds, according to the firm.
The deal comes more than a year after Hawkins Way snapped up the site of the former Midtown DoubleTree hotel at 569 Lexington Avenue for $146 million.
The sale of the former New York Marriott East Side hotel caps a turbulent era for the property. The 35-story, 406,000-square-foot building, which opened in 1924 as the Shelton Towers Hotel, was last sold in 2015 for $270 million to a joint venture between Deka and Ashkenazy Acquisition Corp.
The joint venture tried to sell the property starting in 2016. Three years later, Deka sued Ashkenazy, claiming its partner pulled out of a $174 million deal to take full control of the hotel.
The 655-key property permanently closed in 2020, the first year of the pandemic. The joint venture then sued Marriott, alleging over $12 million in hotel revenue was misappropriated to boost its balance sheet.
Deka, which owned an 85 percent stake in the hotel, moved to foreclose on the property in February 2021 after the joint venture allegedly failed to pay off the $53 million mortgage when it came due in July 2020. Later that year, an appellate court ruled that Ashkenazy had to pay its share of a $135 million loan on the hotel.