CHICAGO—Strategic Hotels & Resorts, Inc. has acquired the remaining 49% ownership interest in the 514-room JW Marriott Essex House. The company previously owned a 51% ownership position in the asset through a joint venture with certain affiliates of KSL Capital Partners, LLC.
Pursuant to the terms of the joint venture agreements, KSL exercised a contractual put option of its equity interests in the asset and Strategic will issue to certain affiliates of KSL an aggregate of 6,595,449 shares of common stock priced at $12.82 per share, or an implied valuation of $84.6 million. The transaction values the asset at a gross valuation of approximately $397.6 million, which includes $6.3 million of value for three owned condominiums; $2.2 million of cash currently held within the joint venture; and the existing $225 million mortgage financing.
“We are very pleased to acquire the remaining interest in the JW Marriott Essex House hotel from our partner, KSL,” commented Raymond L. “Rip” Gellein, chairman and CEO of Strategic Hotels & Resorts, Inc. “Under our joint ownership, we created substantial incremental value, with EBITDA projected to have increased over six times by the end of 2015. There continues to be significant upside in this iconic hotel, which is situated on Central Park. The New York City market is long-term one of the most outstanding travel markets in the world, and we are confident that our efforts to reposition the hotel will drive favorable future growth. This transaction also represents the acquisition of the sole remaining joint venture interest in our best-in-class portfolio of hotels and resorts, further simplifying our balance sheet.”
The net hotel purchase represents an approximately $757,000 per key valuation. The acquired 49% interest in the hotel is projected to generate an incremental approximately $5.5 million of EBITDA in the remaining five months of 2015.
The 40-story, 514-room hotel in Manhattan with views of Central Park has hosted world dignitaries and celebrities since opening in 1931. The building underwent a comprehensive $90-million renovation in 2007. Today, the hotel features amenities such as a full-service spa and fitness center, a fine-dining restaurant and a number of meeting and event spaces.