NEW YORK CITY — Strategic Hotels & Resorts (NYSE: BEE) has entered into an agreement to purchase the 518-unit Essex House Hotel, located at 160 Central Park S. in Manhattan, from Dubai Investment Group for $362.3 million. Additionally, Strategic Hotels has signed a 50-year management agreement with Marriott International to rebrand the hotel as the JW Marriott Essex House New York.
“The Essex House is one of New York City’s most recognized high-end hotels, and I am pleased that we are able to reacquire this landmark asset and convert it to the first JW Marriott in Manhattan,” says Laurence Geller, president and CEO of Strategic Hotels & Resorts.
The 40-story iconic hotel, which was built in 1931, includes 509 hotel rooms and nine condominiums. An affiliate of Strategic Hotels previously owned the property, which sold to Dubai Investment Group in 2005 for approximately $440 million. At the time, the hotel contained 605 hotel rooms and 10 condominium units, until it underwent a $90 million renovation in 2007.
Upon closing, Strategic Hotels plans to invest $18.3 million in property improvements, including renovations of the common areas, system upgrades as well as new signage and other branding efforts in conjunction with the JW Marriott flag.
“We believe there is substantial upside for this hotel as a JW Marriott brand, especially when combining our sales and marketing channels with the excellent asset management expertise of Strategic Hotels,” says Arne Sorenson, president and CEO of Marriott International.
Under the management agreement, Marriott will guarantee the net operating income of the hotel up to $21.5 million per year for a period of eight years, subject to a maximum funding by Marriott of $14 million in 2013 and $12 million each year from 2014 to 2020.
Strategic Hotels’ stock price closed at $6 per share on Friday, up from $5.05 per share a year earlier.
— Savannah Duncan