Knightstone pays $32.7M to DiamondRock for hotel ground lease in Grand Central

Toronto-based Knightstone Capital Management through the entity KHG NYC Midtown (Nominee) LP paid $32.7 million to DiamondRock Hospitality Company through the entity DiamondRock East 40th Street NYC Owner, LLC for a ground lease controlling the 185-key Courtyard by Marriott New York Manhattan/Fifth Avenue hotel building (H3) at 3 East 40th Street in Grand Central, Manhattan. The expected use is cash flowing.
The deal closed on May 1, 2026 and was recorded on May 15, 2026. The property has 84,500 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $386 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 DiamondRock Hospitality Company was Anika Fischer . The signatory for Knightstone Capital Management was Alan Perlis .
To finance the purchase, Knightstone Capital Management borrowed $31.5 million from BMO Bank . The signatory for Knightstone Capital Management was Alan Perlis .

The fee is owned by members of the Indiveri family of Greenwich, Connecticut, and Florida. The ground lease was originally signed in 1987.

Prior sales, articles and revenue

Prior to this transaction, PincusCo has no record that the buyer Knightstone Capital Management had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller DiamondRock Hospitality Company had not purchased any other properties and had not sold any properties over the same time period. The former owners according to the Department of Housing Preservation and Development includes Tennile Boyd, head officer and Matthew Johnson, site manager. The business entity is Courtyard 5th Avenue. The 84,500-square-foot property generated revenue of $20.1 million or $238 per square foot, according to the most recent income and expense figures.

The property

The hotel building in Grand Central has 84,500 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 52 feet and is 94 feet deep with a total lot size of 4,925 square feet. The lot is irregular. The zoning is C5-2.5 which allows for up to 12 times floor area ratio (FAR) for commercial The city-designated market value for the property in 2022 is $37.9 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property for the past 24 months. In addition, according to city public data, the property has received $3,350 in OATH penalties in the last year.

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 Grand Central, The majority, or 83 percent of the 44.4 million square feet of commercial built space are office buildings, with hotel buildings next occupying 8 percent of the space. In sales, Grand Central has the 5th highest sale turnover among other neighborhoods in the city with $2.4 billion in sales volume in the last two years. For development, Grand Central is the 5th most active neighborhood among other neighborhoods. It had 12 million square feet of commercial and multi-family construction under development in the last two years, which represents 27 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of 10 of the 19 commercial properties representing 2,365,691 square feet of the 2,731,781 square feet. The largest owner is SL Green Realty, followed by RFR Holding and then Eretz Group.
There are no active new building construction projects on this tax block.

The majority, or 94 percent of the 2.7 million square feet of built space are office buildings, with hotel buildings next occupying 5 percent of the space.

The seller

The PincusCo database currently indicates that Diamondrock Hospitality Company owned at least one commercial property in New York City with 84,500 square feet and a PincusCo-determined asset value of $67.8 million. The portfolio consists of at least a single hotel property.

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