US: A joint venture between Electra America and AKA Hotel Residences has purchased The Roger New York hotel for $19 million at a $71 million discount from its last purchase.
This joint venture, Electra America Hospitality Group, announced a $500 million investment fund in February to purchase discounted hotels in New York, Miami, Los Angeles, Washington D.C., Toronto and London.
Russ Urban, CEO of the joint venture, said: “Our business plan assumes that a large number of the hotels that we buy will be closed. Our plan is to take advantage of downtime in the operating cycle to renovate.”
The purchase of The Roger New York is one of the first transactions for this distressed hotel venture. The property has 23 years left on its ground lease and is currently undergoing renovations. It will be closed until spring 2022.
The 193-room hotel is located on Madison Avenue and was last purchased by LaSalle Hotel Properties for approximately $90 million in 2010. It was purchased from Pebblebrook Hotel Trust, which acquired LaSalle for $5.2 billion in 2018. Pebblebrook plans to use the funds gained in the sale to potentially pay off debts and invest in new properties.
New York’s hotel market has seen several distressed properties selling at highly discounted rates in the last few months, as the industry was hit particularly hard by the pandemic. A bill, that is awaiting signature from New York governor Andrew Cuomo, was passed by the New York State Legislature this month that would allow such distressed hotels to be converted into permanent affordable housing.