—Strategic Hotels & Resorts, based in Chicago, has entered into an agreement with the Dubai Investment Group to purchase New York City’s Essex House Hotel for a gross purchase price of approximately $362.3 million.
The sale includes 509 hotel rooms, nine condominium units and hotel-level cash reserves. The transaction equates to a purchase price of approximately $685,000 per unit.
The transaction, which is subject to the satisfaction of customary closing conditions, is expected to close on or before September 7.
Strategic Hotels & Resorts has arranged for $190 million in first mortgage financing from Bank of America. The loan will bear interest at LIBOR plus 400 basis points, with a LIBOR floor of 75 basis points, and will be for an initial term of three years, plus two one-year extension options. The balance of the purchase price will be funded in cash.
In addition, Strategic Hotels & Resorts has signed a 50-year management agreement with Marriott International to rebrand the hotel as the JW Marriott Essex House New York.
Upon closing, Strategic Hotels plans to invest approximately $18.3 million in improvements, including renovations to common areas, systems upgrades and new signage and branding efforts.
In 2005, an affiliate of Strategic Hotels previously owned the Essex House Hotel when it was sold to the DubaiGroup for approximately $440 million, which included 605 hotel rooms and 10 condominium units.
Comprised of 40 floors, Essex House Hotel provides views of Central Park and has hosted dignitaries and celebrities since it opened in 1931. In 2007, the property underwent a $90 million renovation and today includes amenities including a full-service spa and fitness center, a fine-dining restaurant and meeting and event spaces.