Taconic Capital Sells LIC Hotel Site to Palette Hotels for $26M

Alternative investment manager Taconic Capital Advisors has offloaded a former Long Island City, Queens, hotel building just four years after buying it.

Taconic, through the entity Z Hotel LIC Principal, sold the former Z NYC Hotel at 11-01 43rd Avenue to hotel owner-operator Palette Hotels, which used the entity PH LIC Partners, for $25.5 million, according to city records made public Monday.

Erin Rota, deputy general counsel at Taconic, signed the deal for the seller, while Palette Hotels CEO Richard Lou signed for the buyer, records show.

It’s unclear who brokered the deal. Taconic declined to comment, while a spokesperson for Palette Hotels did not immediately respond to a request for comment.

News of the deal comes after Taconic bought the 11-story building between 11th and 12th streets in Long Island City’s Hunters Point neighborhood for $38.4 million in May 2021, as Commercial Observer previously reported. Taconic acquired the property from Merchants Hospitality, which had purchased the asset in 2018 with plans to reposition it into a mixed-use development with retail, coworking space and art galleries.

It’s unclear what happened to both Merchant Hospitality and Taconic’s plans for the property, but Palette Hotels is expected to turn the site into a cash-generating venture, PincusCo reported. New York-based Palette Hotels owns 25 hotels across 20 U.S. cities, according to its website.

Developed in 2011, the 100-key Z NYC Hotel closed during the COVID pandemic and was later leased to apartment rental company Sonder, which terminated its lease agreement at the building in 2020.

But the former hotel still has some current retail tenants, including cocktail bar Lost in Paradise Rooftop and speakeasy The Newsroom.

Isabelle Durso can be reached at idurso@commercialobserver.com.