Fortress Lends $31M in Acquisition of Struggling Midtown Hotel
By Matt Grossman October 22, 2018 5:29 pm
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Philadelphia’s Arden Group has nailed down $31 million in financing to fund its acquisition of the Viceroy Hotel in Midtown Manhattan, according to property records.
The loan, from New York-based Fortress Credit, funds Arden’s acquisition of the hotel’s ground lease from New York REIT, which is disposing of its share in the hotel at a giant loss. Over the summer, Arden entered contract to buy the hotel, at 120 West 57th Street, for $41 million—after New York REIT paid $148.5 million for the property in 2013, according to The Real Deal.
Ark Partners first developed the Midtown lodging earlier that year.
The 240-room hotel, two blocks south of Central Park between Avenue of the Americas and Seventh Avenue, had been on the market since early 2016, when the then newly hired CEO for New York REIT, Wendy Silverstein, began a barrage-like selloff of the trust’s assets.
As of the summer, the REIT, which was founded in 2009, had sold off all its holdings save a narrow majority stake in One Worldwide Plaza, a mixed-use tower in Midtown. Shortly after the Viceroy went into contract, Silverstein left New York REIT amid speculation that she would join WeWork (WE) in a senior post.
Labor costs and ballooning ground-lease payments had left the hotel struggling to break even, Silverstein announced in an earnings call before the sale. The $41 million sale price to Arden values each room at $170,000, down from $620,000 when New York REIT took on the ground lease in 2013.
Rooms at the hotel over the last weekend in October were available for $352 per night with a two-night minimum, according to its website.
Representatives for Arden and for Fortress Credit did not immediately respond to inquiries.
