MCR Pays $180M For Gramercy Park Hotel Ground Lease, Continuing NYC Buying Spree
The Gramercy Park Hotel, a favorite haunt of celebrities visiting Manhattan, has a new owner that could see the historic property reopen as a hotel.
MCR Hotels signed a $179.8M, 99-year ground lease this week for 2 Lexington Ave., also known as the Gramercy Park Hotel, property records filed with the city show. The deal works out to roughly $951 per SF, according to PincusCo, which first reported the transaction.
The Gramercy Park was a legendary New York City hotel frequented by the likes of Madonna, John F. Kennedy, Hunter S. Thompson and Humphrey Bogart. But like many other hotels early in the pandemic, the 190-key property closed abruptly, then ran into financial issues that proved difficult for its owner, Aby Rosen’s RFR Holding, to swallow.
RFR acquired the hotel in 2003 with Ian Schrager and signed a 72-year ground lease in 2006 before buying out Schrager’s stake in 2010, The Real Deal previously reported.
After RFR stopped paying rent following the hotel's closure, it kicked off a legal battle with the owner of the ground underneath the building, Solil Management, the company operating the real estate assets of the late Sol Goldman.
In April 2021 Solil sued to evict RFR and collect $79.5M in unpaid rent, The Real Deal reported. A judge granted that request last June, booting RFR. Solil asked for a further $11.8M in damages from RFR after Rosen's firm stripped the hotel and left it to collect violations. An auction was held last fall to sell off bits of the storied hotel, from furniture to bathrobes, Curbed reported.
At the time, there were rumors that the hotel could be looked at as conversion into condos, but the acquisition by MCR — the third-largest hotel operator in the U.S., with more than 150 hotels across 33 states, according to its website — portends a hospitality future.
The acquisition is part of a distressed shopping spree by MCR, which has become one of the most active buyers of troubled NYC hotel properties since the pandemic began.
In March last year, MCR acquired the Sheraton New York Times Square, the city’s third-largest hotel with 1,780 rooms, at a fraction of its previous sales price. In 2021, MCR bought the Royalton Hotel at 60 West 37th St. for just $42M and also teamed up with Island Capital and Three Wall Capital to buy the Lexington Hotel at 511 Lexington Ave. for $185M.
MCR owns two other acclaimed NYC hotels, the 222-key Ink 48 Hotel in Hell’s Kitchen and the 60-room High Line Hotel in Chelsea.
