Leona Helmsley Estate Signs Deal to Sell Manhattan Hotel
Wall Street Journal reports: The estate of real-estate baroness Leona Helmsley has signed a deal to sell one of its prime Manhattan hotels for about $170 million.
The Helmsley Carlton House on Manhattan's Upper East Side, a luxury hotel with 161 apartment-style rooms, was sold to a partnership between private-equity firm Angelo, Gordon & Co. and Extell Development Co. led by developer Gary Barnett. The sale marks the first deal the estate—whose mandate is to liquidate all the holdings—has brought to the market since Mrs. Helmsley died more than two years ago.
The transaction comes as the market for commercial property, which virtually ground to a standstill during the recession, is showing initial signs of life. According to the people with knowledge of the matter, the list of investors eyeing the Carlton House was a Who's Who in real estate. Among them: New York developer Harry Macklowe, who teamed up with private-equity firm Fortress Investment Group LLC; Barry Sternlicht's Starwood Capital; Arthur and William Zeckendorf; a venture of Stanley Chera and Jacob Safra; and developer Daniel Brodsky. Mr. Chera confirmed his interest in the property. The other investors declined to comment or couldn't be reached.
Howard Rubenstein, the spokesman for the Helmsley estate, declined to comment on the sale. The deal is expected to close in July. The new owner likely will convert the upper floors of the property into apartments.
To be sure, pressure continues to build in the commercial real-estate market, with landlords struggling with rising vacancies, falling rents and heavy debt loads. Federal Reserve Chairman Ben Bernanke said recently that CRE loans at small and regional banks are "the biggest credit issue that we still have." More than $160 billion of commercial properties in the U.S. are now in default, foreclosure or bankruptcy estimates New York-based research firm Real Capital Analytics.
The Helmsley deal, on the other hand, shows that demand for quality properties is increasing as investors who have raised billions of dollars to take advantage of the current downturn are eager to put their money into work. Located in the middle of the fashionable Madison Avenue shopping district, the Carlton House has some of the most valuable retail space in the world. Apartments in the area also sell for top dollar, although Manhattan residential prices have suffered along with those in the rest of the U.S.
According to Real Capital Analytics, the amount of investment sales increased to $18.8 billion in the fourth quarter from only $10.4 billion in the first quarter of 2009. Still, that figure remains only a fraction of the $145 billion seen in the first quarter of 2007, the market peak. The firm estimates that about $20.9 billion of property is on the block this quarter.
View the full article on Wall Street Journal: Leona Helmsley Estate Signs Deal to Sell Manhattan Hotel
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Posted by: Nina Turner