Atlas Hospitality signs Times Square ground lease valued at $59M where it plans 401-key hotel

Atlas Hospitality through the entity 711 Seventh Hotel Associates LLC signed a 99-year ground lease valued at $58.9 million with long-time owners, who are members of the Schwesinger, Daniel and Shworles families, through the entity Corner Locations II, L.P. for control of an L=shaped parcel at 711 Seven Avenue in Times Square, Manhattan. The property also has frontage on 48th Street, but does not control the corner.
On the lot, there is one active new building construction project for a 401-unit, 112,862 square-foot hotel (R-1) building. The project was submitted by Raj Guru of Atlas Hospitality, with plans filed April 28, 2021 and it has not been permitted yet.
The deal closed on November 22, 2022 and was recorded on December 5, 2022. The property has 30,328 square feet of built space and 50,338 square feet of additional air rights for a total buildable of 80,670 square feet according to PincusCo analysis of city data. The sale price per built square foot is $1,941 and the price per buildable square foot is $730 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)
The signatory for the landlord was Edmund A. Schwesinger Jr. The signatory for Atlas Hospitality was Raj Guru. The family has owned the property since at least 1968. For much of that time it was leased through a ground lease, but that lease expired. Over the past two years the owner partnership has brought cases in landlord and tenant court to remove tenants, according to a review of court records.

Prior sales and revenue

Prior to this transaction, Pincusco has no record that the buyer Atlas Hospitality had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller Edmund A. Schwesinger Jr. had not purchased any other properties and had not sold any properties over the same time period. The 30,328-square-foot property generated revenue of $2.4 million or $79 per square foot, according to the most recent income and expense figures.

The property

The 711 7th Avenue parcel has frontage of 50 feet and is 120 feet deep with a total lot size of 8,067 square feet. The lot is irregular. The zoning is C6-7T which allows for up to 14 times floor area ratio (FAR) for commercial The city-designated market value for the property in 2022 is $13.8 million.

The neighborhood

In Times Square, the majority, or 58 percent of the 10 million square feet of commercial built space are office buildings, with hotel buildings next occupying 30 percent of the space. In sales, Times Square has the 40th highest sale turnover among other neighborhoods in Manhattan with $85.1 million in sales volume in the last two years. For development, Times Square has 1.6 times the average amount of major developments relative to other neighborhoods and is the 17th highest in Manhattan. It had 1.7 million square feet of commercial and multi-family construction under development in the last two years, which represents 17 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of six of the nine commercial properties representing 2,819,863 square feet of the 3,154,582 square feet. The largest owner is Beacon Capital Partners, followed by Maefield Development and then RIU Hotels & Resorts.
On the tax block, there were four new building construction projects totaling 627,760 square feet. The largest is a 974-unit, 260,360-square-foot R-1 building developed by Sam Chang with plans filed December 23, 2019 and permitted February 19, 2020. The second largest is a 650-unit, 248,520-square-foot R-1 building developed by David Wrobel with plans filed April 5, 2017 and permitted February 11, 2019.

The majority, or 63 percent of the 3.2 million square feet of built space are office buildings, with hotel buildings next occupying 35 percent of the space.

Direct link to Acris document. link