Hospitality: Helmsley Hotel to be sold for $310M

By KRIS HUDSON for the Wall St Journal

The estate of Leona Helmsley has reached a deal to sell the New York Helmsley hotel to Host Hotels & Resorts Inc. for more than $310 million in the latest move the estate is taking to liquidate the real-estate empire Harry Helmsley took decades to build, according to people familiar with the matter.

Host, owner of 104 luxury and upscale hotels, prevailed in a lengthy bidding process for the hotel on East 42nd Street. The company plans to spend more than $50 million renovating it, people said.

A spokesman for the estate wasn’t immediately available for comment.

Mrs. Helmsley, who inherited her husband’s real-estate holdings, valued at about $5 billion, died in 2007.

Since then her estate has been slowly selling assets, with most of the proceeds going to the Leona M. and Harry B. Helmsley Charitable Trust.

The estate’s decision to sell the New York Helmsley reflects the steady improvement in the city’s hotel market thanks to the rise in tourism and business travel. Prices have rebounded from the lows they hit in 2009, according to Massey Knakal Realty Services.

Host will pay between $310 million and $315 million for the 773-room hotel, amounting to at least $401,000 a room, one person familiar with the deal said. That’s less than the city’s average of $424,150 a room for the 12 months ended in September, but the hotel needs a pricey upgrade due to years of being operated without significant capital investment, people said.

“It’s a great three-star [hotel] that hasn’t had any capital reinvested of consequence in 10-plus years,” says Lawrence Wolfe, senior managing director at Eastdil Secured in New York, who isn’t involved in the sale. “It needs a heavy redo [of] $50,000 in each guest room plus money into the public area and facade.”

Mr. Helmsley is one of the legends of New York real estate. Over three decades he acquired some of the most prominent properties in the city, including the Empire State Building and the Park Lane Hotel. He also created a sensation on the gossip pages when he divorced his wife to marry Leona Roberts, who worked for his company as a broker.

In 1989, Mr. and Mrs. Helmsley were accused of tax evasion. Mrs. Helmsley was convicted and sentenced to 16 years in prison, though she served less than two. Mr. Helmsley was deemed too ill to stand trial.

Mrs. Helmsley’s estate has also sold the Carlton House and a 40-acre estate in Greenwich, Conn., that was also known as Dunnellen Hall.

Host, based in Bethesda, Md., was formed when Marriott International Inc. spun off most of its real-estate holdings in 1993. The company converted to a real-estate investment trust in 1999. Its properties include trophy hotels such as the Four Seasons in Atlanta and Philadelphia, the Fairmont Kea Lani in Hawaii and a St. Regis in Houston.

The sale of the New York Helmsley won’t close until the end of the first quarter due to tax matters pertaining to the Helmsley estate, one of these people said.

The estate is being represented in the sale by CB Richard Ellis Group Inc.


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