Everyone knows that real estate in New York City is expensive—especially hotel real estate, as the transaction market picks up and more buyers come to the table. But a recent deal for the New York Marriott Marquis, located in the heart of Times Square, has shocked a lot of people in the lodging industry.
According to this post from The Real Deal, the Empire State Development Corporation sold the nearly 2,000-room hotel for a pithy price of just $19.9 million. The lucky buyer is reportedly Host Hotels and Resorts, a company that has leased the property since 1982.
According to The Real Deal, when Host entered into the agreement with the ESDC and the city back in 1982, Host agreed to pay $34 million for the hotel, transferring title immediately back to the city, and then pay the city rent each year for 75 years. Host also had an option to repurchase the property for fair market value once the lease expired. In 1998, the parties amended the agreement, shortening the lease term to 40 years—so it would expire in 2017—and providing Host a chance to buy the building for a fixed $19.9 million in 2013—which it appears that company has done.
City Comptroller John Liu told the publication that the deal was “one of the worst deals since Manhattan was sold for $24.”
However, a spokesperson for Host defended the price paid and said, “The purchase price reflects the fact that Host has paid over $1 billion to the city and state in rent, taxes and acquisition costs since the project began, including every penny owed under its ground lease. The bottom line is that we have paid all sums due under the terms of the lease agreement.”
More over on The Real Deal.