Another hotel is coming back online in Times Square, a vote of confidence in the property that comes more than two years after the pandemic forced its closure.
The Hilton Times Square was purchased by Apollo Global Management and hospitality investor Newbond Holdings, people familiar with the deal told the Wall Street Journal. The investors agreed to buy the property for roughly $85 million, only slightly more than one-third of its $242.5 million sales price from 2006.
The deal for the property is expected to close this summer. Once it does, the owners hope to have the hotel at 234 West 42nd Street up and running by the fall. Apollo and Newbond, co-founded by Neil Luthra, also plan to invest in upgrades for the rooms and lobby.
The 478-room hotel was an early casualty of the pandemic, submitting paperwork to close permanently in September 2020. The hotel first shut its doors because of the pandemic in April 2020. Its closure resulted in the permanent laying off of 200 employees.
The hotel’s owner Sunstone Hotel Investors didn’t make payments on its $77.2 million mortgage from April to September, but mortgage payments were held up prior to the pandemic. The California-based REIT also stopped making rent payments on its ground lease in March, setting the stage for a “negotiated transfer” of the property to another party.
At the beginning of 2021, the owner surrendered the 44-story property to Torchlight Investors, the special servicer of the mortgage. They agreed to a lease in lieu of foreclosure. At the time, the hotel was valued at $61 million.
The owners are looking to revive it at an optimistic time for the sector, which is still reckoning with recovery efforts after its pandemic-driven downturn. NYC and Co. is projecting a surge in tourism this year, forecasting 56 million visitors to the city, up from 22 million in 2020.
Another Times Square hotel, the 1,780-room Sheraton New York Times Square Hotel, was recently purchased by MCR Investors for $323 million, according to property records. It was the city’s largest hotel deal in about two years, but took a humbling haircut when compared with its $738 million purchase price in 2006.
[WSJ] —Holden Walter-Warner