New York City—The Mcsam Hotel Group led by Sam Chang has received a $121.35 million debt and equity package to construct a 45-story, 526-room hotel in Chelsea. Located at 140 W. 28th St., the building is being constructed on a vacant parking lot on West 28th Street between Sixth and Seventh avenues and is scheduled to open in 2019.
The 178,000 square-foot hotel will operate under two separate hotel names, under the Marriott brand—TownePlace Suites and Springhill Suites. It will feature two separate lobbies and shared common areas.
Adam Hakim, managing director, and James Murad, director, both in the capital advisory division of commercial real estate firm Eastern Consolidated, handled the transaction. The financing includes a $97.5 million first mortgage with Bank of the Ozarks, and a $23.85 million mezzanine construction loan from Square Mile Capital Management LLC.
“Contrary to market trends, Eastern Consolidated has successfully placed $723 million in hospitality financing in the last 24 months, including $463 million on behalf of the Mcsam Hotel Group,” says Hakim. “Sam Chang is a proven sponsor and one of the largest hotel developers in the New York City, having completed the construction of over 70 ground-up hotels. No doubt this new hotel in Chelsea will be just as successful.”
Murad explains that hotel performance has remained fairly strong although reports have shown some dips in average daily rates to maintain occupancy rates. He tells GlobeSt.com, “Several lenders in the market today are more bearish on financing new hotel projects in New York City, in fear of a surplus of supply coming online. As a result, lenders are much more focused on their loan basis, hotel brand and location when deciding which projects to lend on.”
He underscores benefits of the project’s location, pointing to its proximity to Penn Station, Madison Square Garden, Hudson Yards and the High Line. Murad says Chelsea attracts a good mix of both business and leisure travelers and is somewhat undersupplied by limited service hotels, relative to other Manhattan neighborhoods.
The deal is the tenth hospitality financing package arranged by Eastern Consolidated in the last 24 months, and fourth arranged on behalf of the Mcsam Hotel Group.