When the ball drops in Times Square this New Year's Eve, a fresh owner will gaze upon one of New York City's most iconic hotels.
The Renaissance New York Times Square Hotel, situated at 2 Times Square, is about to change hands. Sherwood Equities has inked a deal to sell the 200,000-square-foot, 317-key hotel segment of this landmark mixed-use building to Apollo Global Management (APO) and Newbond Holdings for $165 million. The initial reports of the sale surfaced in The Wall Street Journal.
Sherwood received guidance from Newmark (NMRK) team comprising Adam Spies, Adam Etra, Avery Silverstein, Marcella Fasulo, and Nikita Bernstein, along with Art Adler from Adler Hotel Advisors, sources familiar with the deal revealed.
"Timing is everything for Sherwood," remarked Jonathan Snider, Senior Vice President of Sherwood Equities. "While certain segments of the commercial real estate industry still face challenges, the pent-up demand for travel has made Times Square's hospitality sector thrive like never before. We saw this as the right moment to divest the hotel with favorable winds at our back."
This transition in the ownership of the 2 Times Square segment arrives after 38 years under Sherwood's ownership. Sherwood initially acquired the land beneath the property in 1985 and completed the building in 1990. In addition to 2 Times Square, Sherwood Equities is renowned for developing other notable properties, including 1 Times Square (where the New Year's Eve ball descends) and 1600 Broadway, a mixed-use complex featuring residential condominiums, digital billboards, and retail spaces that include the famous M&M's World.
Sherwood will still retain ownership of the signage division of 2 Times Square, featuring advertisements from brands such as Coke, Samsung, and Prudential, alongside digital signage. They will also continue to own the retail segment, which is presently leased to businesses like Olive Garden, Van Leeuwen's, and Max Brenner Chocolate.
Jonathan Snider expressed, "This building is truly an international icon and symbolizes New York. If one image embodies New York City, it's 2 Times Square. It's the quintessential postcard."
The Renaissance New York Times Square Hotel, a Marriott property, offers a panoramic view of the famous ball drop location. Situated at the northern intersection of Seventh Avenue and 48th Street in Times Square, this corner welcomes over 164,000 daily visitors, according to Newmark.
Sherwood Equities, which manages assets beyond the hospitality industry, opted for an experienced hotel operator in the form of Neil Luthra, co-founder of Newbond Holdings. His firm has completed transactions worth $1 billion and oversees 7,000 hotel keys. Additionally, in 2021, Newbond Holdings announced a partnership with Madison Realty Capital to create Madison Newbond, a hotel debt platform that focuses on originating and acquiring first mortgages, mezzanine loans, and preferred equity for U.S. hotel properties, as detailed on the firm's website.
Jonathan Snider emphasized, "We aren't primarily focused on hospitality, and we wanted to bring in a top-tier hotel operator for this building's hotel segment. We found that Newbond and Apollo were the perfect fit."
The sale of the hotel at 2 Times Square comes in the wake of New York City's Local Law 18, which recently took effect, thereby making it illegal to list thousands of short-term rentals and Airbnb-style faux hotel rooms. This legislative action came in response to advocacy from the hotel industry against short-term rentals and unregulated Airbnb units. The New York hospitality sector has managed to recover from a period of reduced occupancy levels during the three-year COVID-19 pandemic, now benefiting from increased tourism in 2023. Investment Disclaimer: This article is provided for informational purposes only and does not constitute investment advice or an endorsement of any mentioned companies. Prior to making investment decisions, individuals should conduct their research and seek professional advice. Investing in real estate and hospitality markets carries inherent risks, and past performance is not indicative of future results.