With His Hospitality Niche, Morris Moinian Is Making a Big Play in Chelsea, Flatiron
By Lauren Elkies Schram February 22, 2017 9:00 amreprints
“Morris is a gunslinger.”
That’s how Wayne S. Cook, at attorney at Windels Marx Lane & Mittendorf, described his client Morris Moinian.
“Morris has a very, very keen focus on undervalued assets,” Cook continued. “He can see the finish line, especially in the hotel market right now. It’s overvalued and a lot of players are not coming in.”
Indeed, Moinian’s Fortuna Realty Group is banking big on small hotels in Midtown South—a product that scares a lot of developers. The industry has been plagued by oversupply and the growing presence of Airbnb, as Commercial Observer has reported. But you can’t be a gunslinger and be scared to pull the trigger.
Fortuna’s Hotel Henri by Wyndham, opening on March 5, and Hotel Hayden, which started taking reservations early this month, mark “the first lifestyle-driven, boutique properties to open on these northern Chelsea blocks,” Moinian, the principal and founder of Fortuna, touted.
The hotel developer (whose surname will no doubt ring in the ears of every real estate observer—and, yes, he is part of the famed Moinian clan) hopes to appeal to local creative, fashion and tech agencies.
Cook negotiated the cumbersome Feb. 29, 2016, $60 million acquisition and financing for the 124-key Hotel Henri site at 37 West 24th Street between Broadway and Avenue of the Americas. Moinian had to buy the property, which previously operated as a Wyndham Garden, out of bankruptcy from Gemini Real Estate Advisors.
“I like Morris,” said broker Robert Shapiro of City Center Real Estate. “He’s a visionary. He’s created opportunities where no one’s thought of them.”
One source who worked with Moinian said that what makes Moinian unusual is how he generally buys a site, develops a hotel and operates it himself, rather than finding a flag to run it. That allows Moinian to “double dip” because he makes money on the hotel plus he keeps the 5 to 10 percent of gross revenue that the flag charges.
Moinian, who is behind Hotel Hugo in Soho, isn’t limiting himself to just the Flatiron District and Chelsea going forward.
“Ultimately, I’d like to have boutique hotels with lifestyles pretty much in every neighborhood of the city, up and down, left and right,” he said.
Fortuna and an investing partner in May 2016 won a partially built hotel site at 139-141 Orchard Street at auction with a $30.8 million bid. Moinian said the direction for the Lower East Side property hasn’t been determined.
Moinian has long-established relationships, having relied on M&T Bank for much of his financing over the last 14 years. For example, at the end of last year, Fortuna secured a $65 million construction loan from M&T for the 176-key Hotel Hendricks, which is under development at 25 West 38th Street, behind Lord & Taylor. (After studying successful hotel brands, Moinian noticed that many of them shared one thing in common: names starting with “H,” like Hilton, Hyatt and Holiday Inn. So he chose a similar path and decided to use male names that began with an “H.”)
Jason Lipiec, a group vice president at M&T, said that Moinan is a “resourceful” client with few problems at his projects. If an issue crops up, however—like when a demolition worker was killed in October 2015 at the Hotel Hendricks site—Moinian doesn’t make whatever he’s dealing with “our problem,” Lipiec said. Some developers meanwhile, may seek concessions from their bank—more money, an opportunity to extend interest-only, etc.
“He’s got resources and the character to understand that we’ve bought in with certain expectations,” the banker added.
Fortuna is developing a nearly 50-story hotel at 1150 Avenue of the Americas between West 44th and West 45th Streets. The company purchased the site, which had a floor area ratio of 110,620 square feet, in March 2012 for $39 million, property records indicate. A little more than a year later, Moinian bought nearly 28,000 square feet of air rights from the Algonquin Hotel for $4.7 million, according to Shapiro, his broker in the deal.
It shouldn’t be any surprise that Moinian would have had a taste for real estate. The Moinian family hails from Tehran, where “my entire family, my parents and grandparents and father’s side and mother’s side, we’ve all been in textiles and real estate,” Moinian said. “So we grew up in that environment.”
Moinian immigrated to the U.S. in September 1976 at the age of 15. He attended high school in Great Neck, N.Y., and took a few courses at the CW Post campus of Long Island University.
Moinian started his career in the clothing business. In 1979, he and a childhood friend founded Chattanoga Manufacturing, which did business as Jordan Sportswear. The women’s blouse and women’s apparel manufacturing company became “among one of the largest sportswear clothing manufacturers and importers,” Moinian said. He “had a good run and then switched gradually to real estate with a big niche focused in hotels.”
Developer Joseph Sitt of Thor Equities met Moinian when they were both garmentos. Sitt had retail chain Ashley Stewart with its almost 600 stores, and Moinian would sell him products.
“I owe him tremendously,” said Sitt, who met Moinian 28 years ago through the former’s father-in-law. “He gave me guidance, helped me in terms of recruiting team members, product and assortment, sweetheart deals on [blouses]. That was his specialty, and all career women’s clothing.”
Moinian introduced Sitt to Moinian’s oldest brother, Joseph of The Moinian Group, which led to their partnering at the 24-story office building at 245 Fifth Avenue between East 27th and East 28th Streets. Thor and Joe bought out Goldman Sachs at the site for $162 million in April 2011.
A third brother, David, is also in the real estate business with his Moin Development. (Joe is 62; David is 57; Morris is 55; and a sister, Rachel, is 65.)
“Morris’ singular trait that has made him successful, first from the fashion industry and then in real estate, is his focus and organization,” David said. “He has the ability to get laser focused on a task, like building a new project or trading a piece of property. Once he is focused, the train is going full steam ahead.”
Moinian founded Fortuna, which employs about 25 people including Moinian’s two sons, in 1984. It aims to be a one-stop shop. The company is vertically integrated as it “acquires properties, land, we design internally, we build in the same office, we are fully staffed with FF&E, that’s furniture, fixtures [and] equipment, and we sell and we also manage all in one,” Moinian said.
From his firm’s beginnings to 2000, when he opened the Dylan Hotel in collaboration with singer Britney Spears, Moinian was involved in nine real estate transactions including his first acquisition of a small walk-up apartment building at 1489 First Avenue on the Upper East Side in April 1984.
The Dylan Hotel, which is at the former Chemist Club building at 52 East 41st Street between Park and Madison Avenues, could be Moinian’s most famous project to date due to the affiliation with Spears; she opened restaurant NYLA there.
“It was a huge bang, bang, bang, but people are tired of reading that,” Moinian said. “And then after several years of management, I sold the property for a substantial amount of money [in May 2007].”
That substantial amount of money? $77 million.
One property Moinian is especially proud of is The Garden City Hotel in Long Island, N.Y., the legendary hotel he acquired in June 2012. He pointed to the large framed picture of the property on the wall in his Midtown East office.
“Being a Long Islander”—which Moinian pronounced Long-I-Lander, with an emphasis on the I—“I always had a passion for the trophy property, which is truly unique, which is The Garden City Hotel. It is the only glamorous hotel with 140 years of life among the sixth-oldest hotels in America.”
The hotel has hosted guests from the members of the Vanderbilt clan to Toby Bennett to Michael Jackson. Hillary Clinton held her rehearsal at the hotel before the first presidential debate against Trump on Sept. 26, 2016, at nearby Hofstra University. Clinton rented the grand ballroom, which can accommodate 500 people for a sit-down dinner. Moinian missed her by five minutes. “I was told she came with a crew of 30 people, plus security,” he said.
Funny enough, he won the hotel in a “quiet sale” against one bidder: Donald Trump.
Newsday reported at the time that a source said Moinian’s group was considered “a better fit,” for the hotel. Moiniain said a confidentiality agreement precluded him from divulging the price.
Moinian told CO that he didn’t vote for Trump but described the president during that transaction as being “extremely friendly, and kind, and very social and very impressively smart.”
The 272-room Garden City Hotel then underwent a $35 million renovation with rooms starting to come back online in mid-February 2014. And the hotel received AAA’s coveted four-diamond rating for 2017, one of three Long Island hotels to boast that ranking.
While Moinian specializes in high-end hotels, Joseph focuses on the residential and commercial sectors with his Moinian Group and David has a full-service real estate development company with his Moin Development.
How did Morris come up with the name Fortuna?
“The truth is there’s a singer called Fortune. She’s from São Paulo [Brazil] and I was fascinated by her singing,” Moinian said. “It’s true. The name sat with me for years, and at first I tried to call it Fortune, Then I came up With Fortuna. Better rhyme.”
In 2007, Moinian launched a new arm of the company, Fortuna Funding NY, to originate small- to medium-sized mezzanine loans. Fortuna Funding is currently idle with no outstanding debts, Moinian said, as he focuses more on his own acquisitions.
When Moinian was originating loans, he said he provided one of a couple of million dollars to Gemini Real Estate Advisors. Will Obeid, formerly the chief executive officer of Gemini, said Fortuna had a participating interest in the construction loan that M&T made to Gemini in 2010, which enabled the company to build the Jade Hotel Greenwich Village at 52 West 13th Street. The hotel was completed in January 2013. (The hotel is now called Walker Hotel Greenwich Village and is under different ownership.)
David characterized the three brothers as such: “Joe is a very large presence in a room. He is very warm and inviting. I have the best work ethic. Second to none. I have been driving to my office in the city for nearly 40 years, five days a week. Morris is pragmatic. He likes to remind people that two plus two is four.”
David further said Morris is “very in tune with fashion” and “an excellent chef.”
Joseph described Morris as “thinking outside the box, often recognizing potential somewhere or in something that others might not see. He has a way of seeing the finish line early on and knowing exactly what roads need to be taken in order to get there in the quickest, most efficient manner.”
Morris is a partner in Mr. C Hotel Beverly Hills, which features a Cipriani restaurant. While the Moinian brothers have separately owned and operated businesses (Moin Development shares office space with Fortuna at 527 Madison Avenue at East 54th Street), they have some joint real estate investments (along with their sister) including the 919-room Ramada Orlando Celebration Resort, one mile from Walt Disney World Resort, and Sugar Bay Resort & Spa, an all-inclusive hotel in St. Thomas, in the U.S. Virgin Islands.
Besides real estate, Moinian is the owner of indoor cycling company Revolve, which has a studio each in the Union Square area and Washington, D.C.
Revolve was “something that I thought we can roll into the hotels, but we have not decided any direction as of yet,” Moinian said. He has tried the exercise class one time and found it “tough,” but said he loved it.
Sharply suited and sipping Diet Coke at his desk (which he said he has cut down to one or two cans a day from four or five), Moinian isn’t shy about sticking to his own agenda, saying in an interview that he didn’t want to talk about future projects because that would make them “old news” later on. He softened a bit when talking about what he called his “mood board,” which is really a wall filled with more than two-dozen magazine clippings, photos and interior and exterior renderings. The images provide “design inspiration.” He said the models represent “a typical customer.”
On the topic of anything remotely personal, Moinian—and, in turn, his press representatives—closes down. When asked if he was married, Moinian said, “no comment,” despite framed press clippings about him and his wife, Farah, entertaining in their Manhattan townhouse hanging in his office. His PR agents treated the names and ages of his four children like closely guarded state secrets—despite the fact that son Jonathan, who works for Moinian, sat in on CO’s interview, and chimed in with information.
Moinian resides on the Upper East Side in a 20-foot-wide limestone mansion he purchased in the East 70s off of Fifth Avenue in late-2005 for $12.5 million, property records indicate. A few years later he and his family moved in after completing a $30 million renovation, according to the New York Daily News. A neighboring home built at the same time that is a little wider at 24.5 feet is on the market today for $45 million.
Moinian has come a long way from his early years in Iran, although he still maintains ties to his past. He has hanging in his office an oversized framed portrait of Mohammad Reza Pahlavi, the last Shah of Iran. Moinian also has a much smaller photograph of the king in his younger years.
With real estate and blood shared between them, the larger Moinian clan regularly gets together for Shabbat dinners and holidays, both of Moinian’s brothers said. David said the closeness among the brothers and their children with each other “is a tribute and testament only to my father and mother.”