As the city’s hotel market rebounds, the owners of the massive Row hotel in Midtown are looking to finish a cash-out plan they kicked off four years ago, before a glut of new rooms sent the hotel business into a slump.
Highgate Hotels, the Rockpoint Group and NorthStar Realty Finance have put the 1,331-room Row hotel at 700 Eighth Avenue on the market with an asking price of around $220 million, sources told The Real Deal. That price works out to a shade over $165,000 a key.
Representatives for Highgate and Rockpoint couldn’t be reached for comment. Newmark Knight Frank, the brokerage marketing the property, declined to comment.
Opened as the Hotel Lincoln in 1928, The Row NYC is one of the largest hotels in New York City. And it’s the biggest hotel in New York owned by Highgate, which bills itself as the largest independent hotel manager in Manhattan.
The company, founded by brothers Mahmood and Mehdi Khimji and headed in New York City by principal Neil Luthra, teamed up with the private-equity real estate firm Rockpoint Group in 2010 to buy the property – known then as the Milford Plaza Hotel – from Philip Milstein‘s Ogden Cap Properties for $200 million. The new owners shut down the historic, 27-story hotel fronting the full block along Eighth Avenue between 44th and 45th streets for a renovation, and pumped $140 million into upgrading the property.
They embarked on a plan to sell the property off in three different pieces: the land underneath the hotel, the ground-floor retail portion and then the hotel building itself.
They had good fortune with the first two pieces, selling the land to a partnership between David Werner and Deutsche Asset & Wealth Management for $325 million in 2013, and selling the retail condo to Thor Equities for $64 million the following year, property records show. (When Highgate and Rockpoint created their ground lease, they financed the deal with NorthStar, which later converted its debt position into equity.)
But the next year, Manhattan’s hotel market started to keel under a rush of new supply as thousands of new hotel rooms started to come online. Revenue per available room – or RevPar, one of the key metrics used to assess a hotel’s financial performance – fell for three straight years beginning in 2015.
But RevPar started climbing last year, and hotel owners became more confident about finding buyers for their properties. (Some, however, say that rising labor costs and property taxes are still putting financial strains on properties, even with revenues improving.)
If the Row sells for its asking price of $220 million, that means Highgate and Rockpoint would bring in a total of $609 million from selling off the property’s different pieces. That figure would be about $40 million shy of the $650 million the owners had reportedly hoped to sell the whole package for back in 2013.
In the meantime, Highgate has indisputably been the most active hotel buyer in the city. The company late last year bought the Park Central Hotel at 870 Seventh Avenue for $366 million from Pebblebrook Hotel Trust.