Chicago based Strategic Hotels & Resorts has signed an agreement to purchase New York City’s Essex House Hotel from the Dubai Investment Group for $362.3 million.
The purchase price includes 509 hotel rooms, nine condominium units and significant hotel-level cash reserves.
The transaction, which is subject to the satisfaction of customary closing conditions, is expected to close on or before September 7, 2012.
The Company has also signed a 50-year management agreement with Marriott International to rebrand the hotel as the JW Marriott Essex House New York.
As part of the management agreement, Marriott will guarantee the net operating income of the hotel up to $21.5 million per year for a period of eight years, subject to a maximum funding by Marriott of $14 million in 2013 and $12 million in each year from 2014 to 2020.
“The Essex House is one of New York City’s most recognized high-end hotels, and I am pleased that we are able to reacquire this landmark asset and convert it to the first JW Marriott in Manhattan,” explains Laurence Geller, President and Chief Executive Officer of Strategic Hotels & Resorts,
“The combination of the Essex House Central Park South location, Marriott’s outstanding distribution and world-class customer service, and our successful long-standing relationship with the Marriott brands, clearly positions the Essex House for success.”
Geller added, “We will continue to evaluate and act upon prudent hotel investments that complement our portfolio and create shareholder value.”
Upon closing, Strategic Hotels plans to invest approximately $18.3 million in various property improvements, including renovations to various common areas, select systems upgrades as well as new signage and other branding efforts to distinguish the property under the JW Marriott flag.
An affiliate of Strategic Hotels previously owned the Essex House Hotel, having sold it to the Dubai Investment Group in 2005 for approximately $440.0 million, which included 605 hotel rooms and ten condominium units.
“We’re delighted to have been chosen by our valued partners at Strategic Hotels & Resorts to manage the iconic Essex House Hotel on Central Park South, making it the home of our first JW Marriott hotel in New York City,” commented Arne Sorenson, President and Chief Executive Officer of Marriott International.
“We believe there is substantial upside for this hotel as a JW Marriott brand, especially when combining our sales and marketing channels with the excellent asset management expertise of Strategic Hotels. Come stay with us when you visit New York!”
Mitzi Gaskins, VP & Global Brand Manager, JW Marriott Hotels & Resorts at Marriott International. “We are thrilled to open the first JW Marriott in New York City. Guests of JW Marriott Essex House New York can expect the approachable luxury, elegant design and intuitive service that have become synonymous with our brand worldwide.
“We are making adjustments to the lobby, guestrooms and other public spaces such as the restaurant and spa to reflect the JW Marriott brand. Most of all, we want the hotel is embody a distinct sense of place that appropriately reflects the genuine flavor and energy of New York City.”
Jumeirah Essex House is considered North America’s Leading Business Hotel by the World Travel Awards.