Manhattan's Watson Hotel sells for US$175m as market thaws

Yellowstone Real Estate Investments acquires 600-room property

Published Thu, Apr 8, 2021 · 05:50 AM

New York

A 600-ROOM hotel on Manhattan's West Side has changed hands in one of the largest lodging transactions since the Covid-19 pandemic upended the global hospitality industry.

Yellowstone Real Estate Investments acquired the Watson Hotel on West 57th Street for roughly US$175 million, said people familiar with the sale who asked not to be named because the matter is private.

The price tag is the highest for a Manhattan hotel since the pandemic upended travel, topping the US$150 million that the billionaire Reuben brothers paid for the Surrey Hotel, showed data from Real Capital Analytics.

Issac Hera, who helms the real estate private equity firm Star Real Estate Ventures, confirmed that Yellowstone had acquired the property. He declined to comment on the price.

"The Watson represents for us a unique and rare opportunity to acquire substantial scale on West 57th Street," Mr Hera said in an e-mail.

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"We are big believers in the strength of the US market as a whole and the New York market specifically."

The Watson, which was previously operated as a Holiday Inn, was a textbook casualty of the pandemic. A previous owner defaulted on its loan, leading lender HSBC to find a buyer for the mortgage.

That wound up being Yellowstone, which also acquired the ground lease in a simultaneous transaction.

Eastdil Secured advised both HSBC and the ground owner.

HSBC declined to comment.

The Watson sale comes as accelerating vaccination campaigns kindle hopes for a lodging rebound in the second half of 2021.

Leisure travellers are expected to spend on vacations, while corporate travel departments could get more comfortable putting employees back on the road.

Experts say resort markets will bounce back before big-box hotels in places like New York, which typically depend on business travel and meetings to fill rooms and increase rates.

Yellowstone was part of a joint-venture that recently sold a US apartment portfolio for US$1.75 billion, and the firm is actively looking for opportunities, Mr Hera said.

He also said that his firm is still evaluating potential plans for the Watson, which has been viewed in the past as a potential redevelopment site for offices or apartments. BLOOMBERG


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