NEW YORK CITY Hersha Hospitality Trust has agreed to acquire the under-construction 175-key Hyatt Union Square in New York City for US $104.1 million, or about US$595,000 per key. The hotel is expected to open next year.
The transaction, which is expected to close shortly after the seller completes the hotel’s construction, consists of US$36 million cash paid to the seller, the cancellation of a US$10 million development loan and its accrued interest, and the assumption of two mortgage loans secured by the hotel worth US$55 million in principal.
“The addition of this extremely well-located, efficient full-service Hyatt hotel greatly enhances our already strong presence in Manhattan,” says Hersha CEO Jay Shah. “The company continues to execute on its long-term plan of establishing itself as one of the premier providers of top-quality hotels in high-growth urban gateway markets with strong barriers to entry. The Union Square hotel will benefit from some of the most robust lodging demand in the country, and we believe this property is strategically positioned to leverage New York’s strong recovery and the multiple demand generators in Midtown South, Greenwich Village and Downtown.
“These vibrant market characteristics, combined with the desirability of this new asset, should drive attractive growth in revenue per available room and cash flow as the hotel matures into the recovery,” Shah says. “The hotel, at the corner of Fourth Avenue and 13th Street, will be the closest major hotel to New York University and will be close to the entertainment, fashion and design districts of Manhattan. The hotel is expected to perform favorably relative to its competitive set, which includes the W Union Square, the Gramercy Park Hotel and the Gansevoort Park.”
Hersha sourced this off-market transaction through its development loan program. The hotel will be managed by Hersha Hospitality Management LP.
The 4-star hotel features a historic facade and 23-ft. lobby ceilings, an upscale restaurant, a destination lobby bar, an exclusive rooftop lounge, private terraces, a fitness facility and a pool.