Hilton Acquires Midtown Timeshare Hotel for $136M
By Rebecca Baird-Remba February 8, 2023 5:01 pm
reprints
Hilton Grand Vacations has picked up a disputed, newly opened timeshare hotel in Midtown from one of the project’s lenders for $136 million, public records show.
Private equity firm 54 Madison Partners, which took over the 161-key hotel at 12 East 48th Street through foreclosure in 2020, sold the property to operator Hilton on Jan. 31, according to property records made public Wednesday.
The hotel opened in the summer of 2021 under the Hilton Club label as The Central at 5th, with rooms starting at $350 a night. Hilton said in a press release at the time that it was its fifth timeshare hotel — in which owners can buy a share in exchange for the right to stay there for a certain number of days per year — in New York City.
Court documents indicate that Hilton had executed a purchase and sale agreement for the hotel for $187 million back in 2015.
Developer Hidrock Realty was close to finishing construction on the 31-story hotel when the pandemic struck and delayed the work. Hidrock had secured financing from two lenders, with Midland National Life Insurance providing $100.5 million in senior construction financing, and private equity firm 54 Madison Partners originating $23 million in mezzanine debt.
The construction financing from 54 Madison was contingent on the project being “substantially complete” by the end of 2019. Hidrock argued the building was 80 percent finished at that point. Nevertheless, 54 Madison notified Hidrock in January 2020 that it had officially defaulted on its loan.
Ultimately, 54 Madison successfully took over the property and put it up for sale in a foreclosure auction in May 2020 at the height of the pandemic. It said buyers could bid only in person — despite New York’s ban on unnecessary in-person gatherings at the time — which Hidrock dubbed a “sham” and a “fire sale” in court documents.
The two parties fought it out in New York State Supreme Court in 2020, but a judge signed off on foreclosure in May of that year. 54 Madison held onto the property until it sold a majority interest in the building — structured as a commercial condo unit and a commercial co-op unit — to Hilton.
“The Central at 5th is quickly becoming one of our most popular resorts,” said Gordon Gurnik, a senior vice president at Hilton Grand Vacations. “We are very optimistic about the future of tourism and hospitality in New York City, and we are pleased to continue growing our footprint in the city through this world-class property.”
Rebecca Baird-Remba can be reached at rbairdremba@commercialobserver.com.
