New York-based Fortress Investment Group this week funded a $260 million refinancing for the Sheraton New York Times Square Hotel. JLL’s Hotels & Hospitality Group arranged the loan on behalf of two local investors, MCR Hotels and Island Capital Group.
The four-year, floating-rate loan replaced $250 million in existing seller financing, which the sponsors used to acquire the asset in April 2022. MCR and Island Capital are betting on the recovery of New York’s lodging market, aiming at reinforcing the Sheraton’s position as one of Manhattan’s leading hotel properties, said Tyler Morse, chairman and chief executive officer of MCR Hotels.
“The hotel’s performance has rebounded since we acquired [it], which we believe is a testament to the strength of New York City’s lodging market,” Morse added.
Andrew Farkas, chairman and chief executive of Island Capital Group, noted refinancing the asset was a key component of the partners’ strategy to help the hotel capture additional market share.
Sheraton New York Times Square is located at 811 7th Ave, the heart of Midtown Manhattan. The property is at the northern end of the Times Square retail corridor, close to tourist attractions including Radio City Music Hall, The Museum of Modern Art, Central Park and Rockefeller Center. The 1,780-key asset is also one of New York City’s largest hotels, with a 23,000-square-foot ballroom.
Kevin Davis, Americas CEO of JLL’s Hotels and Hospitality group, said the refinancing is indicative of improved debt capital markets sentiment in New York. “We expect [the improved market sentiment] will persist as the hotel market continues to benefit from the recovery of group, business transient and foreign travel demand,” he notes.
The JLL advisory team was led by Kevin Davis, managing director Mark Fisher and analyst Russell Freed.