Two Kings pays $80.3M to Watermark for Holiday Inn in Chelsea

Two Kings Real Estate through the entity Tulip Hotels LLC paid $80.3 million to Watermark Lodging Trust and Watermark Capital Partners through the entity Cwi Chelsea Hotel, LLC for the midblock hotel Holiday Inn Manhattan 6th Ave – Chelsea, at 125 West 26th Street in Chelsea, Manhattan.
The deal closed on June 15, 2022 and was recorded on June 28, 2022. The property has 64,764 square feet of built space according to PincusCo analysis of city data. The sale price per built square foot is $1,239 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.)
Carey Watermark, an affiliate of the seller, bought the property in 2013 for $113 million, The signatory for Watermark Lodging Trust and Watermark Capital Partners was Brendan Medzigian. The signatory for Two Kings Real Estate was Christopher Wang. This is the Holiday Inn Manhattan 6th Ave – Chelsea. Two Kings Real Estate is led by Manish Shah and Christopher Wang. The contract date was February 7, 2022.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Two Kings Real Estate had purchased any other properties and has no record it sold any properties over the past 24 months.
The seller Watermark Lodging Trust 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 Nicolas Daeppen, head officer and Damian Rosario, site manager. The business entity is Chelsea Hotel Operator.

The property

The 125 West 26th Street parcel has frontage of 65 feet and is 98 feet deep with a total lot size of 6,476 square feet. The zoning is M1-6 which allows for up to 10 times floor area ratio (FAR) for manufacturing The city-designated market value for the property in 2022 is $31.2 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 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 $5 million on this tax lot.

The neighborhood

In Chelsea, the bulk, or 35 percent of the 62.6 million square feet of commercial built space are residential elevator buildings, with office buildings next occupying 30 percent of the space. In sales, Chelsea has the 2nd highest sale turnover among other neighborhoods in the city with $2.3 billion in sales volume in the last two years. For development, Chelsea has 1.4 times the average amount of major developments relative to other neighborhoods and is the 16th highest in Manhattan. It had 1.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 2 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of eight of the 27 commercial properties representing 343,255 square feet of the 1,317,646 square feet. The largest owner is Watermark Lodging Trust, followed by Afiaa and then Chaim Simkowitz. There are no active new building construction projects on this tax block.

The majority, or 50 percent of the 1.5 million square feet of built space are office buildings, with residential elevator buildings next occupying 31 percent of the space.

The seller

The PincusCo database currently indicates that Watermark Lodging Trust owned at least two commercial properties with 167,588 square feet and a city-determined market value of $60.6 million. (Market value is typically about 50% of actual value.) Within the portfolio, all identified are hotel properties. They are all located in Manhattan.

Surrounding

Within a 400-foot radius of 121 West 26th Street, PincusCo identified nine commercial real estate items of interests occurred over the past 24 months.
Of those nine items, one was in new building development. It was a new building permit issued on July 13, 2020 for a 26,543-square-foot R-2 building with 13 residential units at 128 West 26th Street.
Of those nine items, two were sales above $5 million totaling $12.6 million. The most recent of the two was All Purpose Music which bought one condo unit in the 6,600-square-foot, 14-unit mixed-use building (RC) on 137 West 25th Street for $6 million from Daniel Eskada on June 9, 2021.
Of those nine items, six were loans above $5 million totaling $59.5 million. The most recent of the six was Flatiron Real Estate Advisors which borrowed $11.3 million from BCB Community Bank secured by the 18,093-square-foot, 11-unit rental (D7) on 132 West 26th Street on April 13, 2022.

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