NEW YORK CITY — Ashford Hospitality Trust Inc. (NYSE: AHT) has acquired the Embassy Suites by Hilton New York Midtown Manhattan for $195 million, or $629,000 per room. The 41-story, 310-room hotel is located on 37th Street between 5th and 6th avenues, near Bryant Park and Times Square.
While the seller was not disclosed, The Real Deal reports that AIG Global Real Estate owned the majority stake in the property.
This is Ashford’s first direct hotel investment in New York City. According to data analytics firm STR, the number of hotel rooms in Manhattan that opened in 2018 was down 32 percent from 2017. Furthermore, for the first time since 2013, demand outpaced supply in both 2017 and 2018.
“The hotel is a high-quality, well-positioned asset that we expect will benefit from the positive trends occurring in the dynamic Manhattan market,” says Douglas Kessler, Ashford’s president and CEO. “Having recently opened in 2018, the property is still ramping up operations, and we believe there is significant growth and upside to occur.”
Indeed, Ashford reports that there are several new development projects in Midtown that are expected to fuel growth in the area. On a trailing three-month basis ending Dec. 31, 2018, the revenue per available room (RevPAR) for the Embassy Suites was $254. The average daily rate (ADR) was $276.
The hotel opened in January 2018 and is located less than a mile from Pennsylvania Station, Grand Central Terminal and the Empire State Building. Amenities in the hotel include 4,000 square feet of flexible meeting space, three food and beverage vendors, an outdoor sky lawn, business center, 24-hour guest convenience shop and a fitness center. A 47-space attached parking garage is included in the transaction, though it is leased to a third-party operator on a triple net basis.
In connection with the transaction, Ashford also closed a $145 million, non-recourse mortgage loan. The three-year term comes with two one-year extension options, pending certain, undisclosed conditions. The interest-only loan bears an interest rate of LIBOR plus 3.9 percent.
As of Sept. 30, 2018, Dallas-based Ashford owned 118 hotels in 31 states.
Ashford’s stock closed Wednesday at $4.61 per share, down from $6.94 per share one year ago, a 33 percent decrease over the 12-month period.
— Alex Tostado