All-Equity Hotel Plan Moves Forward

NEW YORK CITY-Construction financing is a challenge to obtain these days, particularly in the lodging sector, but at least one new Midtown project has got that all figured out. Brack Capital Real Estate, which recently partnered with James Hotels for a Soho property, is providing $50 million in equity toward a 78,000-square-foot hostelry to be built on West 50th Street. There will no debt employed to move the project forward.

Brack’s CEO, Issac Hera, said in a release Friday that his company has entered into a 99-year ground lease along with an unnamed European hotel partner to build on what is currently the site of a multi-story parking facility at 218-222 W. 50th St., a few blocks north of Times Square between Broadway and Eighth Avenue. Sidney Rosenthal of Grubb & Ellis represented both the buyer and the seller in the 218-222 W. 50th deal; the price was not disclosed.

In the release, Hera calls the acquisition “unique, as this $50-million development project will be built all equity and all funds are already in place for its completion within two years.” He adds, “The location at the center of commerce and tourism shows Brack’s continued confidence in New York City as one of the world’s greatest destinations. We are constantly looking for new deals and believe there are many opportunities in today’s market.”

A spokeswoman for Brack did not respond by deadline to GlobeSt.com’s requests for additional details about the property’s name, design or construction start date. According to the release, plans for the site will be announced at a later date.

Crain’s New York Business on Friday quoted Hera as saying, “Even though the debt market is improving, the ability to find ground-up financing is still limited and unattractive. The current financing environment still gives a big advantage to developers that have the ability to develop all equity.”

Founded in 1992 and with offices on three continents, Brack has acted as a principal in investments of over $8 billion, primarily in the US and Europe. As a developer and investor, it has taken the lead in projects totaling more than 40 million square feet of office, retail and residential space.

The West 50th project will be latest in a series of Manhattan investments from Brack. Its James New York Hotel, a 114-key, 70,000-square-foot boutique property, opened this past September. On Manhattan’s Upper West Side, the company has the 200,000-square foot Greystone apartment hotel to its credit.

In 2007, GlobeSt.com reported that Brack would convert another parking facility into a 300-key hotel. Brack opted to build a lodging property rather than office, due to the site’s small size and its proximity to Herald Square, Penn Station and the 34th Street shopping corridor. The 30-story Hilton Garden Inn at 63 W. 35h St. was the result; Brack sold the 110,000-square-foot property in early 2009. 

Brack recently transformed the former home of Tiffany & Co. at 15 Union Square West into a contemporary residential condominium, and similarly converted a 9/11-damaged office building at 90 West St. into a 410-unit luxury rental apartment building. It owns a number of other high-end apartment properties throughout Manhattan.