Strategic Hotels & Resorts has acquired the remaining 49 percent ownership interest in the JW Marriott Essex House hotel from KSL Capital Partners for $84.6m in stock, assuming with the deal a $225m loan from MetLife that was used to refinance the property in December.
Strategic and KSL paid Dubai Group $356.3m for the property in September 2012, financing the purchase with a $190m loan from Bank of America, later infusing $18m into the 514-room hotel for a renovation and rebranding.
KSL, exercising a put option of its equity interests in the asset, will receive an aggregate of nearly 6.6m shares of Strategic’s common stock, priced at $12.82 per share (an implied valuation of $84.6m).
The transaction values the asset at a gross valuation of approximately $397.6m, including the value of three owned condominiums, $2.2m of cash currently held within the joint venture, and the existing $225m mortgage.
The 40-story tower, which opened in 1931, is situated at the southern edge of Central Park, a notable landmark amid the New York City skyline thanks to the words ‘Essex House’ emblazoned atop its rooftop in giant red letters.
“There continues to be significant upside in this iconic hotel,” said Raymond Gellein, Strategic’s chairman and CEO. “The New York City market is long-term one of the most outstanding travel markets in the world, and we are confident that our efforts to reposition the hotel will drive favorable future growth.
“This transaction also represents the acquisition of the sole remaining joint venture interest in our best-in-class portfolio of hotels and resorts, further simplifying our balance sheet.”