Hotel property hot in New York

Hotels are popular among CRE investors in New York.

For Justin Magazine, the vice president at commercial property management service firm Savills, large commercial assets are all the rage in New York City.

"Some of them won't close by the end of the year but I haven't seen this many large assets on the market in a long time," Magazine told The Commercial Observer.

With a rising demand via both domestic and offshore investors, institutional quality flag assets and the idea of bringing a new brand to the New York market have helped spur activity. Three of the city's best markets for generating interest from potential investors have been the Lower East Side and Lower Manhattan, according to The Commercial Observer.

"It's no secret that New York City is the top hotel market in the world in terms of transactions," Magazine said.

One of the top properties on the market is the London New York, which is owned by the Blackstone Group and sits at 151 West 54th St. According to a report from The Real Deal, the ownership group is looking for at least $500 million for the 575,241-square-foot property.

Buy and sell
Blackstone purchased the lease for the 562-room, 54-story hotel from Lehman Brothers for $193 million in 2005, which comes out to around $381,000 per room, according to The Real Deal.

Once Blackstone purchased the property, the firm terminated the hotel's operating agreement with Marriott and agreed to terms with new partnership shortly after. Blackstone turned to its affiliate, Luxury Resorts, to run the hotel.

Blackstone's lease has 123 years remaining, but the decision to sell comes after the group revealed it would be selling its London West Hollywood hotel in Beverly Hills.

Blackstone is also hoping to land a buyer for its 9,000-square-foot carriage house building at 154 West 55th St. That property is directly connected to the London New York and could be turned into for-sale residential units, according to The Commercial Observer.

"I think you'll see premiums in terms of price per key depending on the asset and if there is a repositioning play involved," Magazine added.

Buyers getting into the market had little trouble locating financing options in 2013, and that's likely to be the stance in 2014 after hotel lending deals increased by 75 percent for banks.

"Banks are willing and aggressive in lending to hotel owners in New York," Magazine said.

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