Brookfield Nears Deal to Buy the Hotel Indigo for US$160M
Date: May 2018
Location: Lower East Side, New York, USA
Name: Hotel Indigo Lower East Side New York
No. of Keys: 294
Seller: Brack Capital Real Estate, who were asking $176m in 2017. Brack started life in NY in 1994, acquired a leading Dutch property company for €1.2bn in 2002 and since 2004 carry out it real estate business as BCRE NV.
In NY they own the Citizen M on Times Square and are building the Citizen M on Bowery, the James NY Hotel, Hilton Garden Inn Manhattan, as well as various residential and office operations. Globally they own real estate in Germany, Russia, UK and India.
Brack Capital and partner InterContinental Hotels Group bought the stalled development site at 171 Ludlow Street (also known as 180 Orchard Street) for $46.4 million in 2011 from developer Morris Platt, and completed construction of the 26-story building by 2015.
Brack and InterContinental sold the retail condominium at the base of the building and its parking garage that year to Meir Cohen’s Cohen Equities and Premier Equities for $21 million.
Then the developers listed the hotel portion last year with the hotel investment-sales team at Eastdil Secured led by Larry Wolfe, who recently jumped to Newmark Knight Frank with three of his teammates.
Buyer: Brookfield Property Partners, who is a diversified global real estate company that owns, operates and develops one of the largest portfolios of office, retail, multifamily, industrial, hospitality, triple net lease, self-storage, student housing and manufactured housing assets.
Its investment objective, they say, is to generate attractive long-term returns on equity of 12%−15% based on stable cash flows, asset appreciation and annual distribution growth of 5%−8%.
Their HQ is in Toronto, Canada with major offices in New York, London, Sydney, Rio de Janeiro, Dubai, Mumbai & Shanghai (100 offices in 30 countries) – so truly global then!
Brookfield, through one of its private real estate funds, has signed a letter of intent to buy the Hotel Indigo on the B from Brack Capital Real Estate for $160 million,
The company’s beginnings were in Brazil in 1899, when Canadian financiers William Mackenzie and Frederick Stark Pearson established the São Paulo Railway, Light and Power Co. after introducing the first electric streetcars to São Paulo and Rio de Janeiro.
They used capital raised on the Toronto Stock Exchange to launch the venture, which builds and operates electricity and transport infrastructure.
Today their office portfolio includes landmark assets such as Brookfield Places in New York, Toronto and Perth, Canary Wharf in London, Potsdamer Platz in Berlin and Darling Park in Sydney.
They are no slouch in the retail sector either…through their 34% ownership of GGP, the second largest mall owner in the U.S., they hold an interest in 125 premier retail assets in the U.S. (approximately 123 million square feet), including Ala Moana Center (Honolulu), Tysons Galleria (Washington D.C.), Glendale Galleria (Los Angeles) and Water Tower Place (Chicago).
They also own urban mixed use retail districts in New York, Shanghai, London and Berlin.
In Hospitality they own Centre Parcs in the UK and recently made a £430m take-over of SACO serviced apartments and own the Atlantis Paradise in The Bahamas and the Sheraton Centre in Toronto.
Price: US$160m
Price per Key: US$554,218
Another hotel, the W Union Square, is under negotiation to trade at a discount to its previous purchase price. Westbrook Partners last week was close to signing a contract to buy the hotel for $168 million, another reduction of roughly 10 percent from the $185.3 million seller Host Hotel & Resorts paid for the 270-key property in 2010.
THPT Comment: Wow a real battle of the giants! they don’t get much bigger than either BCRE or Brookfield. Would love to have sat in on those negotiations…
First Seem: The Real Deal/The News Funnel