🚨Highgate and Gencom are acquiring the 607-room InterContinental New York Times Square for ~$230M (~$379k/key), one of NYC’s largest post-pandemic hotel deals. The price reflects a mid-5% cap rate on in-place NOI, below replacement cost for a luxury Manhattan asset. The trade highlights how easing borrowing costs and NYC’s 84% summer occupancy have revived liquidity for top-tier hotels, even as broader U.S. hotel demand softens.
Sale Price: $230M (~$379k/key), pending close
Prior Loan: $190M refinance in 2018 (~$313k/key)
NYC Occupancy: 85.2% (July 2025) vs. U.S. avg. 68.2%
NYC RevPAR: ~$220, summer 2025
Loan Performance. Prior $190M debt equated to ~80% LTV in 2018. Today’s trade implies ~55–65% LTV max financing to meet debt yield tests, preserving DSCR.
Demand Dynamics. NYC’s 84%+ occupancy vs U.S. ~68% allows underwriting stability in the mid-80s range. Leisure-driven Times Square demand is complemented by group/corporate recovery.
Asset Strategies. Expect phased PIP/CapEx to keep brand standards; minimize downtime by sequencing upgrades in off-peak months. Operating expense baseline remains elevated (union labor, utilities).
Capital Markets. Fed’s September rate cut is thawing hotel liquidity. Senior debt likely via banks or funds at 55–60% LTV; spreads still cautious but improving for prime NYC assets.
Rates are easing, improving debt service math.
NYC hotels outperform U.S. averages; occupancy supports aggressive but defensible underwriting.
Financing remains conservative; lenders cautious but present.
Expense load and union costs demand realistic margin assumptions.
🛠 Operator’s Lens
Refi. Lock debt at 55–60% LTV, with forward refi optionality if rates compress further.
Value-Add. Time PIP/renovations to off-peak demand; allocate CapEx reserve upfront.
Development. Not a new build, but replacement cost advantage underpins valuation.
Lender POV. Prime NYC trophy assets are financeable, but debt yield hurdles require strong in-place cash flow.
Watch Fed’s next moves: further easing could compress cap rates, bolstering exit valuations.
Track NYC tourism and convention calendar to confirm $220 RevPAR durability into 2026.
Downside risk: broader U.S. leisure softening or a 2026 recession could temper international inflows.
Money Tourism — “Highgate & Gencom to Acquire InterContinental New York Times Square” (Sept 2025). HospitalityNet — “U.S. Hotel Performance Update July 2025” (Sept 2025). STR Dataset — Monthly Occupancy & RevPAR (July 2025).
