Strategic Hotels & Resorts has agreed to buy New York City’s Essex House Hotel from the Dubai Investment Group for around $362.3m.
The acquisition includes 509 hotel rooms, nine condominium units and hotel-level cash reserves.
The company, which has secured $190m in first mortgage financing from Bank of America, is looking for joint venture options and other alternatives, including asset sales, to fund the balance of this transaction.
Set up in 1931 and renovated in 2007, the 40-floor Essex House Hotel features a spa and fitness centre, restaurant, and meeting and event spaces.
Strategic Hotels has also forged a 50-year management deal with Marriott International to rebrand the property as the JW Marriott Essex House New York.
Under the agreement, Marriott will guarantee the net operating income of up to $21.5m per year for eight years, subject to a maximum funding by Marriott of $14m in 2013 and $12m every year from 2014 to 2020.
Total cumulative fundings by Marriott are capped at $40m.
Upon closing, Strategic Hotels plans to invest around $18.3m in various property improvements as well as new signage and other branding efforts.
Marriott International president and chief executive officer Arne Sorenson, commenting on the transaction, said, "We believe there is substantial upside for this hotel as a JW Marriott brand, especially when combining our sales and marketing channels with the excellent asset management expertise of Strategic Hotels."
The deal is expected to close on or before 7 September 2012.
Strategic Hotels & Resorts owns and provides high-end hotels and resorts in the US, Mexico and Europe.
The company currently has ownership interests in 17 properties with an aggregate of 7,762 rooms and 840,000ft² of meeting space.
JW Marriott is part of Marriott International’s luxury portfolio and consists of properties in gateway cities and resort locations around the world.
Image: Essex House Hotel will be rebranded as the JW Marriott Essex House New York. Photo: Marriott International, Inc.