Apollo Global Management, along with San Francisco hotel investment and advisory firm Chartres Lodging Group, has agreed to sell a freehold interest in the Novotel New York Times Square to UK-based hotel operator Millennium & Copthorne Hotels for $273.6 million in cash. The transaction is expected to close during the second quarter.
It marks one of the earliest exits for Apollo’s US-focused property vehicle, Apollo Global Real Estate (AGRE) US Fund, for which the firm held a final close in 2012. Of the $866.6 million in capital raised for the fund and related co-investments, Apollo had invested about $435.9 million and realized only $4.1 million of the fund as of the end of 2013, according to the firm’s fourth-quarter earnings results.
Apollo and Chartres closed on the purchase of the 480-room property from a subsidiary of Accor Business and Leisure Management in February 2012 for €71 million ($96.89 million). At the time of the acquisition, the partnership had planned to renovate and reposition the property, which opened in 1984, over an 18-month period for a cost of approximately €89 million over the next 18 months.
The hotel was generating a pre-tax profit of $2.1m for the 327-day period ending 31 December 2012, according to a statement released by Millennium & Copthorne today. The hotel operator attributed the profit partly to the earnings impact that resulted from the significant refurbishment of the hotel, which began in the second half of 2012 and was completed last November.
The Novotel New York Times Square is a 34-story building located at 226 W. 52nd Street, in the center of New York City’s Manhattan theatre district. The property includes the hotel, limited office and retail space and a penthouse apartment.