Swiss hotel company signs ground lease with BD Hotels in Midtown East valued at $20.6M

The Swiss hotel company HERA Hospitality Property, which is affiliated with Wolfgang Hotels & Resorts, through the entity Hera Hospitality Property AG signed a 99-year lease valued at $20.6 million with landlord BD Hotels through the entity Elysee Hotel, LLC for the hotel building (H1) at 60 East 54th Street in Midtown East, Manhattan.
The deal closed on January 1, 2024 and was recorded on February 5, 2024. The property has 65,452 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $314 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 seller bought the property on February 1, 2016, for $55 million. The signatory for BD Hotels was Richard Born. The signatory for HERA Hospitality Property and Wolfgang Hotels & Resorts was Daniel Schneider.

This is a 99-year lease starting January 1, 2024. Daniel Schneider is identified as President of the tenant entity, which is a Swiss company.  In August 2023, BD Hotels borrowed $34.5 million in a refinance.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer HERA Hospitality Property had purchased any other properties and has no record it sold any properties over the past 24 months.
The fee owner BD Hotels had not purchased any other properties and sold or leased two properties in two transactions for a total of $156.5 million over the same time period. The landlord according to the Department of Housing Preservation and Development includes Ira Drukier, head officer and Henry Kallan, shareholder. The business entity is Elysee Hotel Llc.

The property

The hotel building in Midtown East has 65,452 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 60 feet and is 100 feet deep with a total lot size of 6,025 square feet. 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 $17.8 million. The most recent loan totaled $34.5 million and was provided by Metropolitan Commercial Bank on August 11, 2023.

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 not received any significant violations 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 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 $3.8 billion in sales volume in the last two years. For development, Midtown East is the 2nd most active neighborhood among other neighborhoods. It had 14.6 million square feet of commercial and multi-family construction under development in the last two years, which represents 23 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of eight of the 20 commercial properties representing 1,501,969 square feet of the 2,207,161 square feet. The largest owner is Tishman Speyer, followed by Rialto Capital Management and then Korein Family.
There are no active new building construction projects on this tax block.

The majority, or 89 percent of the 2.2 million square feet of built space are office buildings, with retail buildings next occupying 8 percent of the space.

The seller

The PincusCo database currently indicates that BD Hotels owned at least 16 commercial properties in New York City with 1,125,443 square feet and a city-determined market value of $402.9 million. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 99 percent of the 1,125,443 square feet of built space are hotel properties, with walkup properties next occupying 1 percent of the space. They are all located in Manhattan.

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