NEW YORK CITY-MeriStar Hospitality Corp. has acquired an interest in the Radisson Lexington Hotel in Midtown with a $50-million structured investment. The move will provide a nearly $5.8-million cumulative annual preferred return and a 49.99% equity participation. The other investor is a private real estate fund, according to the company.

MeriStar financed the investment in the landmark 705-room hotel with cash on hand. According to a company spokesman, MeriStar was attracted to the property because of the location–at the corner of Lexington Avenue and 48th Street–and occupancy rates in the low 90% range.

“We are pleased to have been able to reallocate capital from our non-core asset sales into a strong hotel in a premier market,” says chief financial officer Donald D. Ollinger in a statement. “We completed this transaction without having to access the capital markets while maintaining adequate liquidity.”

The 28-story hotel was built in 1929 and features 82 suites, 101 deluxe rooms and 522 standard rooms. An $18-million renovation was completed in 2001 and included upgrades to all public spaces, guest rooms, bathrooms and mechanical systems. In March of this year, 90 rooms were upgraded to business-class rooms, with new carpeting, granite-topped work desks and luxury-quality linens. In addition to the guest rooms, four retailers–Raffles, J. Sung Dynasty, Latin Quarter and Starbucks–lease space at the hotel.

“This strategic investment provides entry into the dynamic Midtown Manhattan market offering a strong current yield with substantial upside potential while limiting downside exposure,” according to Paul W. Whetsell, chairman and chief executive officer. “This transaction is consistent with our focus on larger hotels in strong urban markets with high barriers to entry.”

Highgate Oxford Management Co., which has managed the hotel since 1999, will continue on as manager.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.