Hidary Brothers and Hidrock Realty on Hotel Development on Greenwich Street
Jotham Sederstrom June 5, 2012, 9:30 a.m.
Earlier this quarter, Hidrock Realty made news when it was revealed that the company had acquired a development lot on Greenwich Street near the World Trade Center site for $27.9 million and planned to build a 300-key hotel there. What few real estate analysts may have noticed, however, was that the deal was just the latest in a series of increasingly ambitious hotel projects for the New York City-based development and management company. Last week, brothers Abraham, Eddie and Steven Hidary—president and vice-presidents, respectively—spoke to The Commercial Observer about the hotel market, Lower Manhattan and sibling rivalries.
The Commercial Observer: Earlier this year, Hidrock acquired 133 Greenwich Street, a site you intend on developing into a hotel property. Has Hidrock waded into the hospitality market before?
Eddie Hidary: Actually we have two other hotels under development at this point, both Marriott. One is branded as Springhill Suites, 173 rooms, scheduled to open the first quarter of 2013. The other is a Courtyard by Marriott, 168 rooms, scheduled to open around the end of 2012.
When did Hidrock initially get involved in the hotel development sector?
Abraham Hidary: We purchased a defaulted note at the end of 2009 at 960 Sixth Avenue. We foreclosed on that note in the middle of 2010 and we decided to convert it. It was an office building. We decided to convert it to a hotel then. So that happened simultaneous to the Springhill Suites project, which is at 25 West 37th Street. That was two low-rise buildings that we purchased in late 2009 and we had decided really early 2010 to demolish those buildings and build a hotel project. So both of those really happened simultaneous in early- to mid-2010.
Were there discussions about turning those sites into offices or residential instead of hotel?
Abraham Hidary: Yes, the 960 Sixth Avenue project. When we actually purchased the note we thought we’d keep it as an office building, but the hotel market was improving at that point and the office market was sort of stagnating. That’s when we decided to convert that building. It was post-purchase of the note, but it was pre-foreclosure that we decided to convert it to a hotel.
What appeals to you guys about the hotel market right now?
Eddie Hidary: Tourism in New York is, as you know, booming and has been setting record levels over the last few years and continues to do so. The streets we walk every day, we’ve seen how they’ve changed over the last five or 10 years. Room rates continue to go up, occupancy continues to be strong. So after really learning the industry and seeing it for ourselves within this market that we live in, it really enticed us to want to get into the business.
Hidrock is partnering with hotel investor Robert Finvarb in the project. Had you had a long relationship with the company, or is this a first for Hidrock?
Steven Hidary: No, actually he was one of the guys that we brought up to the team early on. Being that we were experts in New York but not in hotels, he was a key member involved in at least the Springhill Suites project on 37th Street. He helped us finalize the selection of Marriott as our hotel company. When we identified 133 Greenwich as an acquisition, he was one of our first calls.
Do you expect to be working with him on other hotel projects?
Eddie Hidary: Yes, we have a wonderful relationship, as we do with all our partners. We have private high-net-worth individuals as partners as well as institutional partners. Sort of the philosophy that permeates in the office here is that real estate is a gentleman’s business and with respect to partners, to lenders, to tenants, to vendors, we can make everything fabulous.
The project is incredibly close to the World Trade Center site. Was that proximity important?
Eddie Hidary: The area has changed a lot over the last 10 years, as we all know. Over the last couple of years, with the memorial now opening around a year ago, it’s transformed even further and the vision is starting to become a reality. And it’s something that did attract us to the area. Tourism now, you walk the streets over there and there are tourists all over, which wasn’t the case. And yes, it did have a play in us wanting to get into that market.
Abraham Hidary: Not only the fact it’s the World Trade, but it’s also the fact that the entire neighborhood is being transformed from Battery Park to South Street Seaport. Every neighborhood has taken on something special, and with the transit hub coming, it’s just going to make it even better for businesses and, as we know, it’s already much better for residents and for tourists.
The transformation has been remarkable but, frankly, it’s still kind of dead at night, isn’t it?
Abraham Hidary: If you compare the neighborhood today to 12 months ago, you’ll see a radical shift. And I think if you compare it today to 12 months from now, it’s going to be just as radical.
Steven Hidary: We have to keep in mind that it’s still a construction-development site downtown. In a few years, you’ll have a Brookfield development, and a Westfield development of retail and shopping that’s going to bring restaurants, bars and nightlife. You’ll see a change from that.
From what I understand, Hidrock is in the process of refinancing several assets in its Manhattan portfolio of four buildings. Can you elaborate on what Hidrock’s currently leveraging?
Abraham Hidary: We completed two refinances, both assets that we’ve owned for approximately four or five years. And we brought down the interest rates dramatically on new five-year financing.
Steven Hidary: I’ll just add to that, on the leasing and management side of the office portfolio, occupancy for us is in the mid- to high-90s throughout the portfolio. And on the management side, we recently achieved Energy Star certification and we’ve brought down our utility costs.
As siblings working together do you fight often?
Abraham Hidary: We love it, working together.
But do you fight?
Eddie Hidary: Oh, we fight (laughs). But, no, we have a great relationship and we’ve been able to work well together with much success.
Steven Hidary: Our father started the business around 30 years ago and we’ve been involved now for 12 or 13 years at this point. We changed the business plan from investing in a family fund throughout the eastern part of the country into focusing on New York and growing our portfolio within the New York area. And that’s what we’ve done, and we’ve maintained more of a focus now on commercial office buildings and now we’ve expanded into hotels over the last couple of years.
Do you guys ever get tired of seeing each other?
Abraham Hidary: We all live in the same neighborhood. We drive, we commute to work together.