MCR, Island Capital pay $323.3M to Host Hotels for Times Square Sheraton

MCR Development and Island Capital Group through the entity Snyts Owner LLC paid $323.3 million to Host Hotels & Resorts through the entity Snyt LLC for the 1,780-unit Times Square Sheraton at 811 Seventh Avenue in Midtown West, Manhattan. The sale was previously reported at $356 million. The price difference may be due to non-real estate value. In fact on the transfer records, the “full sale price” is recorded as $373 million. Host bought the hotel for $738.17 million in 2006.

The deal closed on April 19, 2022 and was recorded on May 3, 2022.
The property has 1,172,021 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $275 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 Host Hotels & Resorts was Jeffrey S. Clark. The signatory for MCR Development and Island Capital Group was William White. The Real Deal was the first to report the sale of the Sheraton hotel which was sold at a loss.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer MCR Development purchased one properties in one transactions for a total of $40.8 million and has no record it sold any properties over the past 24 months.
The seller Host Hotels & Resorts 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 Jeffrey Clark, head officer and Michael Bormann, site manager. The business entities are Marriott Hotel Services and Hst Lessee Snyt Llc.

The property

The 811 7th Avenue parcel has frontage of 200 feet and is 305 feet deep with a total lot size of 60,775 square feet. The lot is irregular. 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 city-designated market value for the property in 2022 is $283.4 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 nine DOB violations and $5,740 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on September 21, 2012. 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 Midtown West, the majority, or 69 percent of the 82.2 million square feet of commercial built space are office buildings, with hotel buildings next occupying 13 percent of the space. In sales, Midtown West has the 7th highest sale turnover among other neighborhoods in the city with $1.6 billion in sales volume in the last two years. For development, Midtown West is the 3rd most active neighborhood among other neighborhoods. It had 8.5 million square feet of commercial and multi-family construction under development in the last two years, which represents 10 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other hotel buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of two of the five commercial properties representing 2,654,229 square feet of the 2,701,677 square feet. The two identified owners are Paramount Group and Host Hotels & Resorts. There are no active new building construction projects on this tax block.

The majority, or 56 percent of the 2.7 million square feet of built space are office buildings, with hotel buildings next occupying 44 percent of the space.

The seller

The PincusCo database currently indicates that Host Hotels & Resorts owned at least one commercial property with 1,172,021 square feet and a city-determined market value of $356.7 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.

The buyer

The PincusCo database currently indicates that MCR Development owned at least one commercial property with 103,750 square feet and a city-determined market value of $38.4 million. (Market value is typically about 50% of actual value.) The portfolio has $26.1 million in debt, borrowed from Western Alliance Bank. The portfolio consists of at least a single hotel property. It is located in Manhattan.

Surrounding

Within a 400-foot radius of 811 7th Avenue, PincusCo identified two commercial real estate items of interests occurred over the past 24 months.
One of those two items was a sale which Centerpark bought one condo unit in the 41,692-square-foot, 213-unit mixed-use building (RM) on 159 West 53rd Street for $15 million from Imperial Parking Systems on December 3, 2020.
One of those two items was a loan which Centerpark borrowed $8.2 million from Citibank secured by one condo unit in the 41,692-square-foot, 213-unit mixed-use building (RM) on 159 West 53rd Street on December 3, 2020.

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