Dubai sale of NY's Essex House on track - Jumeirah
Sale deadline extended by one week; firm reportedly defaulted on loan
The sale of New York’s Jumeirah Essex House was still on track to go ahead on Friday (September 14), despite a delay in the signing of the final deal and a reported loan default by the hotel’s Dubai owners, insiders said.
Dubai Investment Group (DIG), part of Jumeirah Group’s parent company Dubai Holding, last month confirmed it planned to sell the 509-room Art Deco hotel at 160 Central Park South to Strategic Hotels & Resorts (SHR) for around US$375m.
The deal was to be concluded on September 7, but a statement issued by SHR stated the final signing had been delayed to September 14 so the Chicago-based firm could “secure the right alternatives to fund the remaining capital requirements.”
According to the US-based CrainsNewYork, SHR’s delay had resulted on DIC defaulting on a loan worth around US$180m.
However, a spokesperson from Jumeirah confirmed the sale was still going ahead at the weekend.
“The sale of the Essex House by its current owner DIG to a new owner has been agreed. Jumeirah Group is working with the new owning company to facilitate a smooth transition,” said Piers Schreiber, Jumeirah Group’s vice president of corporate communications and public affairs.
DIG bought the Essex House for US$423.9m in 2005, according to real estate research and information company Real Capital Analytics.
Despite the loss of the iconic hotel, Gerard Lawless, Jumeirah Group president and CEO, said the US was still a priority for the region.
“The US is a very important source of outbound traffic for us… We are bolstering our sales and marketing presence within the US and we have offices in LA, Chicago and New York. We will make sure we keep a high profile there.
“We have a good opportunity to source another suitable hotel within New York and if it comes it will be great but it will be on more of an opportunist basis. It will take some time and we don’t have any immediate plans at the moment.”
As part of the sale to SHR, the hotel will change operator and become a Marriott-branded property, but Lawless declines to confirm whether the Dubai group will be compensated for the loss of the property.
“It is not unusual that if an asset is sold the new investor wants to change the operator. Marriott came on, in what I assume is an agreement with the investor.”
Figures show that between January and August 2012, Jumeirah’s average hotel occupancy was 74.4 percent, up 5.8 percent compared to the same period in 2011. At the same time, revenue per available room (RevPAR) – the standard performance measure in the hospitality industry – was at AED1,421 (US$386), up 13.4 percent compared to the same period last year.
As part of the group’s ongoing growth, Lawless said the hotelier is aiming to have more than 30 hotels in operation within the next four years.
“At the moment we are operating 22 hotels and really we have gone from 10 or 11 hotels in about 18 months… It is hard to give a number but in four years time… opened and under operation, we should be well into the 30s,” he predicted.