The going is getting really good for hotel sellers in Manhattan. With the economic crisis far back in the rear-view mirror, disposers of hotel assets in New York are banking on healthy returns.
The latest news is that the Standard Hotel, the monolithic glass tower that hovers over the High Line in the Meatpacking District, could sell for as much as $400 million, which would come out to roughly $1.2 million per key. That would be the highest paid for a U.S. hotel on that basis since the financial crisis, and the fourth highest ever, according to Jones Lang LaSalle.
Final bidders for the five-year-old property include a group led by investor Steven Kantor, The Wall Street Journal writes.
The big winners will be the hotel's current owners: Dune Real Estate Partners and Greenfield Partners, which reportedly spent about $240 million on the hotel and its restaurants and nightclub.
As a Standard deal signals, the transactions landscape is booming as property values continue to rise, sellers are ready to cash in and buyers are chomping at the bit to buy.
HVS’ Suzanne Mellen called 2013 a banner year. “Transaction volume reached $25 billion,” she said, adding that number was still below the prior peak of 2006. The average price per key was around $140,000 and hotel sales above $10 million increased 44.6 percent, she said. (According to Mellen, only three hotels in 2012 sold for more than $750,000 per key; that number was 11 in 2013. Three sales in 2013 went for more than $1 million per key: the Park Lane and Setai in New York, and Calistoga Ranch in Napa Valley, Calif.)
Also last year, Mellen said the biggest buyers were private investors, though 2014 will see a wider array of buyers. “The outlook is for another strong transaction year attracting sellers due to high pricing,” she said. “Debt availability will continue.”
And it's not just New York, evidenced by the sale of the St. Regis Bal Harbour in Miami for $213 million, or $1.03 million per key, last month, and others such as the London in West Hollywood.
Those deals, The Wall Street Journal writes, are helping drive the average sales price to new highs. In 2013, the average price per room for hotel sales of $10 million or more was $217,000, topping the $215,000 average in 2007, according to investment bank MLV & Co.
Hotel companies are at the ready, disposing of assets to in an asset-light approach. This includes Starwood Hotels & Resorts Worldwide, which had been selling on average about $350 million of properties a year since 2009 and is looking to step up that pace now and raise about $3 billion from hotel sales by the end of 2016.
The push to sell is underwritten by healthy predictions. PKF is forecasting RevPAR to grow 6.6 percent in 2014, well above its 5.4-percent forecast for 2013.