Strategic Hotel Capital Closes On $440M Disposition Of NYC’s Essex House

NEW YORK— In what has been built up as the highest priced hotel sale transaction of the year, Dubai Investment Group finally closed yesterday on its purchase of New York’s Essex House from Strategic Hotel Capital. The asset, which contains a 501-room Westin, a 104-room St. Regis and condominiums, sold for $440 million, according to Cushman & Wakefield’s mid-year transaction report and a HOTEL BUSINESS® source. The transaction now sits on top of the highest priced hotel transaction list for 2005. The closest competitor was the $300-million sale of the Marriott Wardman Park hotel in Washington, according to Cushman & Wakefield. Starwood Hotels & Resorts Worldwide, Inc. will now be replaced as the hotel’s operator by Jumeirah Hospitality & Leisure, which will work with Dubai Investment Group on a planned $50-million renovation project at the property. The renovation will begin in January and will eventually lead to the transformation of the Essex House into a five-star 500-room hotel. Plans call for the extensive redesign and refurbishment of the lobby, guestrooms and public areas and the creation of market-unique food and beverage outlets. The hotel will remain open during the project, which will be completed in 2006. Furthermore, 15% of the property’s current guestrooms will be converted into condos. However, this change will not result in a decrease in employment at the Essex House. As part of the deal, nine of the 148 private residential condos within the Essex House were sold to Dubai Investment Group. Oxford Lodging Advisory & Investment Group, LLC, has been named as the Essex House’s new asset manager. Oxford Lodging served as the leading investment advisor for Dubai Investment Group during the deal. About three months ago, Oxford Lodging completed a transaction with Longwing Real Estate Ventures, LLC— a member of the Dubai Investment Group— in which the 417-room Sir Francis Drake Hotel in San Francisco was acquired. Sonnenblick-Goldman Co. and Goldman, Sachs & Co. advised SHC in the Essex House disposition. Leading up to the sale, SHC sought to ensure that potential buyers would maintain the current character and use of the hotel. Dubai Investment Group has indicated that it will maintain the high level of hotel service at the asset.