Manhattan's W Hotel Sold At Auction For $2 Million
ARI SHAPIRO, host:
And hotels have also been hit by the recession.
In New York City, the upscale W Hotel at Union Square recently sold at auction for a mere $2 million. That's a luxury hotel in Manhattan for the price of a fancy condo.
It was not a total steal, as Ilya Marritz of member station WNYC reports.
ILYA MARRITZ: When it comes to real estate, New Yorkers are busy bodies. And when a 200-room luxury hotel in the center of town changes hands, it's like finding out that a good friend is getting a divorce. At least that's how it was for Jane Crawdy(ph), who lives nearby.
Ms. JANE CRAWDY: Oh, no. I didn't know that. It's been a great asset to the neighborhood. You know, the restaurant's a gathering place, and it brings a lot of life to Union Square.
MARRITZ: But it was the $2 million price tag that stopped Crawdy in her tracks.
Ms CRAWDY: Holy God. It's a great buy.
MARRITZ: Not exactly. The private equity group that's purchasing the hotel, LEM Mezzanine, is also taking on more than $200 million of the hotel's mortgage. Istithmar World Capital had to offload the property after its parent, the government of Dubai, started defaulting on some of its debts. The property appears to have lost about a quarter of its value since Dubai bought it three years ago.
Dan Lesser is a commercial real estate analyst with CB Richard Ellis. He says the hotel business has had an especially hard time in the recession. Unlike most commercial landlords, hotels effectively sign new tenants every night.
Mr. DAN LESSER (Commercial Real Estate Analyst, CB Richard Ellis): If you think about it, one room that goes unsold overnight, it's a perishable commodity. It can never be resold again. It's gone forever.
MARRITZ: Lesser expects the hotel business won't recover until the U.S. economy has clocked at least three quarters of economic growth.
For NPR News, I'm Ilya Marritz in New York. Transcript provided by NPR, Copyright NPR.