Korea’s Lotte Hotels signs contract to buy ground leased fee under its Midtown East hotel for $490M

Korea’s Lotte Hotels & Resorts, a division of the giant conglomerate Lotte Corporation, signed a contract to buy the ground leased fee under its Midtown East hotel for $490 million from the Archdiocese of New York. The purchase comes less than a year before the annual ground rent is set to reset from $10 million to a projected $36 million, according to an appraisal of the property. The contract is dated November 12, 2025, and the closing is no earlier than January 31, 2026.

Case LINK

Lotte Hotels & Resorts operates the 909-room Lotte New York Palace Hotel at 455 Madison Avenue, a 55-story tower hotel Harry Helmsley constructed above the landmarked Villard Mansion building.
The Commercial Observer reported on the contract yesterday.

CBRE was identified in the contract as the seller’s broker. The petition the Archdiocese filed with the New York State Supreme Court, which is a required process to obtain New York State permission taken by nonprofits and religious organizations when they seek to sell major assets, noted the revenue from the sale would be used satisfy its liabilities, which include more than $226 million for victims of child sexual abuse in line items Independent Reconciliation and Compensation Program and Child Victims Act..
Earlier this week, the Archdiocese said it would allocate $300 million for abuse victims from the sale of property.

According to an appraisal for the ground leased fee at : “The property is encumbered by an amended triple-net lease (the “Ground Lease” or “Lease”) dated July 31, 1980, between the Archdiocese of New York as Landlord and Lotte Hotel New York Palace, LLC as Tenant. The lease expires on June 30, 2052, and the Tenant holds an option to extend through June 30, 2073. Current annual rent is $10,000,000 and is set to increase on July 1, 2026 to the greater of $10,000,000 or 7.5% of the Appraised Value of the Land. Section 2.02(a) of the Lease defines this as, “…the value of the land considered as vacant, unimproved and unencumbered by this lease or the lien of any mortgage or other charge…” For the purposes of this Ground Lease, we have estimated the corresponding feasible Zoning Floor Area (“ZFA”) to be 580,151 square feet, which is the unit of comparison used to determine the Land Value. Pursuant to the requirements of the Ground Lease, we estimate that ground rent for the 26-year period beginning July 1, 2026 will increase to $33.4 million, which assumes a bonused1 Land Value of $800 per ZFA multiplied by an estimated ZFA of 580,151± square feet, less the cost to bonus the site. The Net land value of $444,900,000 is multiplied by the rent factor of 7.5% to estimate the ground rent as of July 1, 2026.”

h2>The property

The hotel building in Midtown East has 832,240 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 140 feet and is 200 feet deep with a total lot size of 35,720 square feet. The lot is irregular. The zoning is C5-3 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 $257.8 million. The most recent loan totaled $250 million and was provided by Goldman Sachs on October 11, 2024.

Prior sales and revenue

The 832,240-square-foot property generated revenue of $137.3 million or $165 per square foot, according to the most recent income and expense figures.

Development

For the tax lot building, it received its initial certificate of occupancy on September 5, 2012.

Violations and lawsuits

According to city public data, the property has received $13,950 in OATH penalties in the last year.

There were no lawsuits or bankruptcies filed against the property for the past 24 months.

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 $3.9 billion in sales volume in the last two years. For development, Midtown East is the 3rd most active neighborhood among other neighborhoods. It had 17.7 million square feet of commercial and multi-family construction under development in the last two years, which represents 28 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of four of the five commercial properties representing 1,522,526 square feet of the 1,596,981 square feet. The two identified owners are Munich Re and Roman Catholic Church. There are no active new building construction projects on this tax block.

The owner

The PincusCo database currently indicates that Archdiocese Of New York owned at least four commercial properties in New York City with 876,567 square feet and a city-determined market value of $233.4 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 95 percent of the 876,567 square feet of built space are hotel properties, with retail properties next occupying 4 percent of the space. They are all located in Manhattan.

The owners according to the Department of Housing Preservation and Development includes John Tolbert, head officer and Nwph Holdings Llc, shareholder. The business entities are Northwood Hospitality Llc and Nwph Llc.

The surrounding

Within a 400-foot radius of The new york palace hotel, PincusCo identified six commercial real estate items of interests occurred over the past 24 months. Of those six items, one was for major renovation including a certificate of occupancy change. It was a permit application filed on September 18, 2025 for the $3.8 million renovation of 74,588-square-foot 56 building with zero residential units at 18 East 50th Street. Of those six items, two were sales above $5 million totaling $548 million. The most recent of the two was Summit Properties and Savanna which bought the 401,686-square-foot, seven-unit office building (O4) on 444 Madison Avenue and one other property for $41.7 million from Westbrook Partners on October 6, 2025. Of those six items, three were loans above $5 million totaling $530 million. The most recent of the three was Tishman Speyer in which borrowed $330 million from JPMorgan Chase, Deutsche Bank, and Morgan Stanley secured by the 645,483-square-foot, six-unit office building (O4) on 300 Park Avenue on July 15, 2025.

Direct link to the property’s ACRIS page and link to DOB NOW portal.