Lightstone Group has received $330 million in financing, including capital from Square Mile Capital Management LLC, for the development of a 618-key Marriott Moxy Hotel in Manhattan’s Times Square South submarket, according to Commercial Property Executive.
“Marriott is the leader in defining the next generation travel and lifestyle space and Moxy hotels are fun concentrated-format lifestyle hotels with smartly designed and technologically advanced rooms, coupled with generous socially activated public space,” said Mitchell Hochberg, Lightstone’s president. “Our partnership with Marriott puts Lightstone at the forefront of the rapidly growing lifestyle hotel sector in the New York City area. Square Mile’s leading support of this project is a testament to Lightstone as a developer of choice for budget lifestyle hotels in the New York market.”
The financing consisted of a $205 million construction loan originated by Square Mile, and the remaining capital coming from two institutional investors.
“This latest debt investment in the hospitality sector positions us well in the early stages of the exciting new micro-hoteling trend. It also establishes a lending relationship with Lightstone, who will be at the forefront of the trend developing two additional hotels of this type under the Moxy brand,” said Michael Lavipour, principal at Square Mile. “Marriott’s first-time involvement at the brand level made this transaction even more compelling.”
Lightstone plans to carry out an adaptive repositioning of an existing 16-story property located at the intersection of 37th Street and 7th Avenue to serve as the foundation of the new hotel.
The property was originally built in 1907 as a 1,885-room, single-room occupancy building before being converted in the 1980s to its most recent office/retail use.
According to Hochberg, the building is well positioned for hotel conversion due to its “grandfathered” zoning status and the existing light and air due to its prototypical H-shape floorplate that would not be possible to construct ground-up today.
For its current conversion, Lightstone vacated the former office tenants, and the property’s interior has been demolished and is in the process of being renovated.
Last year, the company announced plans to invest $1 billion in the development of hotels to help jump-start Marriott International’s Moxy brand. Currently, a Moxy hotel is open in Milan, Italy, and U.S. locations are expected to open this year in Tempe, Ariz., and New Orleans, La. By the end of 2016, eight others are expected to open, including locations in the U.K. and Germany.
In addition to the flagship Moxy, three other Moxy Hotels are currently slated for development by Lightstone in New York City.
Lightstone’s $2 billion portfolio currently includes over 6 million square feet of office, retail and industrial commercial properties, 11,000 residential units and 3,200 hotel keys. The company also owns more than 12,000 land lots across the country.