Strategic Hotels Acquires Essex House, Will Rebrand as JW Marriott
Update-14 Sept: Strategic Hotels & Resorts announced that it had closed on the acquisition of the Essex House Hotel on September 14 and rebranded it the JW Marriott Essex House Hotel. Strategic Hotels entered into a joint venture with an affiliate of KSL Capital Partners to fund the acquisition and will retain 51% of the joint venture. It also announced that it will immediately begin improving the property with a renovation budget of $18.3 million.
Strategic Hotels & Resorts has announced plans to acquire the Essex House Hotel in New York City from the Dubai Investment Group and will rebrand it as the JW Marriott Essex House. For the roughly $362.3 million it will spend, it will get 509 hotel rooms, nine condominium units, and the hotel’s cash reserves. The transaction is expected to close by September 7, 2012.
The hotel first opened up in 1931 as the Sevilla Towers and was branded as Marriott’s Essex House from 1969 through 1985. It is currently the Jumeirah Essex House.
Concurrent with the acquisition, Strategic Hotels signed a 50-year management agreement with Marriott International and Marriott will guarantee the net operating income of the hotel up to $21.5 million per year for the first eight years. An affiliate of the buyer had previously owned the Essex House Hotel and sold it to the Dubai Investment Group in 2005, including 605 rooms and ten condominium units in the $440 million sale.
Upon closing, Strategic Hotels has plans to invest approximately $18.3 million in renovations to common areas, systems, and other various property improvements.
Bank of America will provide financing of $190 million for the first mortgage. Strategic Hotels is currently evaluating other options to fund the balance of transaction.
(Photo: Optimum PX)