Island Capital Group signs $155M refi with Hudson Bay Capital for hotel in Midtown East, up from $125M

Island Capital Group through the entity Lexington Hotel Owner LLC as borrower signed a refi loan with lender Hudson Bay Capital Management through the entity HBC Real Estate Holdings II, LLC valued at $155 million for the Lexington Hotel building (H1) at 511 Lexington Avenue in Midtown East, Manhattan.
The deal closed on April 29, 2024 and was recorded on May 7, 2024. The prior lender was HPS Investment Partners which held debt that had an original loan amount of $125 million.

The property has 314,568 square feet of built space according to a PincusCo analysis of city data. The loan price per built square foot is $492 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 Island Capital Group was Katherine D. Furman. The signatory for Hudson Bay Capital Management was Alexander R. Berger.

Island Capital Group through its C-III Capital Partners paid $183.5 million to DiamondRock Hospitality for the hotel in June 2021. The following year, Island Capital Group filed a suit in New York State Supreme Court in 2022 alleging DiamondRock did not disclose the full cost of a union deal.   LINK

The property

The hotel building in Midtown East has 314,568 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 100 feet and is 174 feet deep with a total lot size of 17,522 square feet. The zoning is C6-6 which allows for up to 15 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The property is in the Individual Landmark. The city-designated market value for the property in 2022 is $108.1 million. The most recent loan totaled $125 million and was provided by HPS Investment Partners on June 30, 2021.

Development

There are no active new building construction projects or major alteration projects with initial costs more than $1 million on this tax lot.

The neighborhood

In Midtown East, The majority, or 81 percent of the 62.6 million square feet of commercial built space are office buildings, with hotel buildings next occupying 7 percent of the space. In sales, Midtown East has the 2nd highest sale turnover among other neighborhoods in the city with $3.6 billion in sales volume in the last two years. For development, Midtown East is the 2nd most active neighborhood among other neighborhoods. It had 16 million square feet of commercial and multi-family construction under development in the last two years, which represents 25 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of seven of the 12 commercial properties representing 992,985 square feet of the 1,053,867 square feet. The largest owner is Navigation Capital Group, followed by Madison Realty Capital and then Holiday Inn Club Vacations.
On the tax block, there was one new building construction project filed totaling 151,836 square feet. It is a 137-unit, 151,836 square-foot residential (R-2) building submitted by New Empire Corp. and filed by Bentley Zhao with plans filed March 28, 2016 and permitted August 12, 2021.

The majority, or 54 percent of the 1.1 million square feet of built space are hotel buildings, with elevator buildings next occupying 44 percent of the space.

The borrower

The PincusCo database currently indicates that Island Capital Group owned at least one commercial property in New York City with 1,172,021 square feet and a city-determined market value of $266.7 million. (Market value is typically about 50% of actual value.) The portfolio consists of at least a single hotel property. It is located in Manhattan.

Direct link to Acris document. link