Strategic Hotels & Resorts confirmed on Friday that it bought the Jumeirah Essex House, located in New York City, and will rebrand it as the JW Marriott Essex House New York.
Strategic Hotels & Resorts, Chicago, bought the property from Dubai Investment Group for US$362.3 million. In light of the US$10 billion in debt it is looking to refinance, Dubai Group, the parent company of Dubai Investment Group, revealed that it was seeking a buyer for the property in March.
The purchase price includes 509 guestrooms and nine condominium units. The transaction is expected to close on or before September 7. Strategic arranged for US$190 million in first mortgage financing from Bank of America, and is funding the rest of the purchase with cash.
Strategic signed a 50-year management agreement with Marriott International to rebrand the hotel as the JW Marriott Essex House New York. As part of the management agreement, Marriott will guarantee the net operating income of the hotel up to US$21.5 million per year for a period of eight years, subject to a maximum funding by Marriott of US$14 million in 2013 and US$12 million in each year from 2014 to 2020. Total cumulative fundings by Marriott are capped at US$40 million.
“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,” said Laurence Geller, Strategic’s president and CEO. Upon closing, Strategic Hotels plans to invest approximately US$18.3 million in various property improvements, including renovations to various common areas, select systems upgrades as well as new signage and other branding efforts to distinguish the property under the JW Marriott flag.