Buyer of Starwood’s 1 Hotel Central Park books loan from teachers

Host Hotels & Resorts downsized the mortgage at 1 Hotel Central Park upon buying the property from Starwood Capital Group for $265 million.

Host Hotels bought the 18-story, 229-room building at 1414 Sixth Avenue with a $150 million mortgage from Teachers’ Retirement System of NYC, according to documents filed with the city. The loan replaces a $162.5 million mortgage obtained in 2018.

The new mortgage works out to a modest 57 percent loan-to-value ratio, but the reduction in size suggests the building is worth less than underwriters thought six years ago.

Several Host Hotels executives did not immediately return email messages seeking more information. News that the deal was in the works was first reported last month.

Starwood purchased the building at the corner of West 58th Street and Sixth Avenue in 2011 for $72 million with plans to turn it into a hotel. CEO Barry Sternlicht branded it “1 Hotel Central Park” at its 2015 opening. Later that year, the company received $125 million in financing for the project from United Overseas Bank.

The Real Deal reported that Starwood tried to sell its trio of brand 1 Hotels in 2016, as a package or piecemeal, but a deal never materialized.

Starwood Capital got the $162.5 million refinancing from Singapore-based United Overseas Bank in 2018.

It has been a busy year for Starwood CEO Barry Sternlicht, who decided in June to lower withdrawal limits at Starwood Real Estate Income Trust as cash ran short. The move was expected to have ripple effects for at least six months. Sternlicht told CNBC’s “Squawk Box” the decision was made “for the benefit of the 80 percent of people who’ve never redeemed.”

The liquidity issues began in late 2022, when redemption requests exceeded the 2 percent threshold for the first time. Starwood fulfilled those requests but failed to do so the following month.

The Real Deal reported that as of the end of April, the REIT had $752 million in liquidity available, split between $446 million in cash, $225 million on a credit line and $45 million of debt securities up for sale.

Starwood began looking to sell again earlier this summer. The time might be right to unload New York City hotels. Their values have grown because of a crackdown on short-term rentals, a rise in tourism and hotel room rates, and a 2021 law that virtually stopped hotel development in its tracks, limiting future competition.

Host Hotels also acquired Starwood’s 1 Hotel Nashville earlier this year. 

— Christina Previte

Correction: This story has been revised to show the purchase price for 1414 Sixth Avenue was $265 million, which is reflected on the closing document, although the recorded deed says $233.8 million, according to H/Advisors, which worked on the deal.