Barings acquires Garment District hotel from Watermark valued at $73.7M

Barings through the entity West 37th Street Hotel LLC acquired the hotel building (H3) at 307-311 West 37th Street in the Garment District, Manhattan, from Watermark Capital Partners and Watermark Lodging Trust through the entity CWI Times Square Hotel, LLC, valued at $73.7 million. Barings acquired the leasehold, and is now the ground lease tenant to Navin C. Dimond’s Stonebridge Companies, the fee owner. The hotel is known as the Courtyard New York Manhattan/Times Square West.

The deal closed on September 30, 2022 and was recorded on October 5, 2022. The property has 102,824 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $716 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.)
Carey Watermark bought a leasehold on the hotel in 2014 for $95 million. Watermark affiliates executed an entity level transfer on April 13, 2020, valued at $51.9 million.

The signatory for Watermark Capital Partners was Brendan Medzigian. The signatory for Barings was Danielle D’Ambrosio. The lease runs for 30 years to 2044.

The Real Deal reported in 2020 that Magna Hospitality Group bought the debt on the building from Barings. It is unclear if Magna is involved in this transaction.

Prior sales and revenue

Prior to this transaction, Pincusco has no record that the buyer Barings had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller Watermark Capital Partners had not purchased any other properties and sold one property in one transaction for a total of $80.3 million over the same time period.

The property

The 307-311 West 37th Street parcel has frontage of 101 feet and is 98 feet deep with a total lot size of 7,357 square feet. The city-designated market value for the property in 2022 is $29.3 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property since September of 2020. In addition, according to city public data, the property has received one DOB violation and $4,000 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on May 14, 2013. There are no active new building construction projects or major alteration projects with initial costs more than $5 million on this tax lot.

The neighborhood

In Garment District, the majority, or 70 percent of the 51.9 million square feet of commercial built space are office buildings, with hotel buildings next occupying 12 percent of the space. In sales, Garment District has 2.7 times the average sales volume among other neighborhoods with $938.2 million in sales volume in the last two years and is the 15th highest in Manhattan. For development, Garment District has 1.5 times the average amount of major developments relative to other neighborhoods and is the 17th highest in Manhattan. It had 1.5 million square feet of commercial and multi-family construction under development in the last two years, which represents 3 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of three of the 21 commercial properties representing 138,923 square feet of the 1,702,651 square feet. The two identified owners are Watermark Lodging Trust and Kano Real Estate Investors.
There are no active new building construction projects on this tax block.

The majority, or 50 percent of the 1.7 million square feet of built space are elevator buildings, with office buildings next occupying 31 percent of the space.

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