Strategic Hotels & Resorts Inc. (BEE) agreed to buy the Jumeirah Essex House, an 80-year-old hotel on Manhattan’s Central Park South, for $362.3 million.
Marriott International Inc. (MAR) will manage the property, which will be rebranded as JW Marriott Essex House New York, Strategic said today in a statement. The seller is Dubai Investment Group LLC, the real estate and asset-management arm of Dubai Group LLC, which is controlled by the emirate’s ruler.
The deal works out to about $685,000 per unit for the 509 hotel rooms and nine condominiums, according to Strategic, a Chicago-based real estate investment trust that focuses on luxury hotels and resorts. The company plans to spend about $18.3 million on renovations, new signs and marketing efforts.
The combination of “location, Marriott’s outstanding distribution and world-class customer service, and our successful long-standing relationship with the Marriott brands, clearly positions the Essex House for success,” Laurence Geller, Strategic’s president and chief executive officer, said in the statement.
New York City hotels had an occupancy rate of 76 percent this year through April, the third-best among the top 25 U.S. markets, behind Miami and Oahu, Hawaii, according to Smith Travel Research Inc., based in Hendersonville, Tennessee.
Essex House, known for the red neon sign bearing its name atop the 40-story tower, opened in 1931. Dubai Investment bought the property in 2005 for $440 million and spent $90 million more on renovations, according to Real Capital Analytics Inc., a New York-based research firm.
Strategic’s purchase will be funded with cash and a $190 million mortgage from Bank of America Corp., the lodging company said. Marriott agreed to manage the hotel for 50 years and to guarantee as much as $21.5 million of hotel net operating income annually for eight years, according to the statement. The deal is expected to be completed by Sept. 7.
“We believe there is substantial upside for this hotel as a JW Marriott brand,” Marriott President and CEO Arne Sorenson said in the statement. It will be the first JW Marriott property in New York, he said.
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