Faced with a hip-deep bidder pool, one of Manhattan’s oldest hotels has fetched $72 million. On Tuesday, the 174-room Algonquin Hotel was sold to real estate investment firm HEI Properties of Norwalk, Conn. for roughly $425,000 per key.
The property is steeped in literary history: Nobel Prize winner William Faulkner stayed at the hotel, and writer Dorothy Parker frequented the hotel’s Oak Room bar.
Unlike many recent hotel sales in Manhattan, HEI claims that the Algonquin will not follow the Plaza’s lead by going residential. The Algonquin has been in business since the early 20th century. While the property is unique, it’s high sale price offers proof that Manhattan hotel assets are in great demand.
“This is a financially viable asset, and that makes it attractive to the new owners as a hotel,” says senior hotel broker Nolan Hecht of Cushman & Wakefield, which represented the seller, Denver-based Miller Global Properties.
The sale comes less than one month after the Essex House — a 605-room hotel located on Central Park South — fetched $500 million.
The Algonquin drew strong interest from hotel companies, REITs and other real estate investors. A flurry of hotel-to-condo conversions within the past 18 months has thinned Manhattan’s inventory of rooms, making existing properties that much more attractive to investors and guests.
Dallas-based Olympus Real Estate bought the Algonquin in 1997 for roughly $30 million. Olympus is a division of real estate investment firm Hicks, Muse, Tare & Furst Inc. The hotel then changed hands again in 2001, when Miller Properties bought it for roughly $41 million.
The firm closed on the hotel only months after the 9/11 attacks when Manhattan commercial real estate values were depressed. Miller, in turn, spent roughly $5 million renovating the hotel only to sell it this week for $72 million.