Host Hotels & Resorts Acquires the 1 Hotel Brooklyn Bridge from Starwood Capital for $202M

Host Hotels & Resorts has acquired the 1 Hotel Brooklyn Bridge, in the Dumbo neighborhood (Brooklyn, New York), from Starwood Capital Partners for $202 million paid in cash. The purchase is of the leasehold interest in the 195-key hotel. Host paid 10.2 times EBITDA, a cap rate of around 8.2%, according to the buyer.

Transaction details: total price, $202M · price per key, $1,035,897 · price per area, around $1,569/SF ($16,889/m²) on ~128,743 SF (~11,961 m²) built · 195 keys.

Parties: buyer, Host Hotels & Resorts · seller, Starwood Capital Partners.

History: the hotel stands on Pier 1 of Brooklyn Bridge Park. In 2012 the city selected Toll Brothers and Starwood Capital (its Fund IX) to build a 1 Hotel-branded hotel and residences there under a 97-year ground lease; the hotel opened in 2017 and has 83 years left on the ground lease with a government nonprofit lessor. It is managed by Starwood Hotels.

Ownership and workforce: leasehold (ground lease) · unionized workforce (union).

Analysis: Host strengthens its New York presence with a luxury hotel opened in 2017 next to the Brooklyn Bridge, in a submarket with both leisure and corporate demand. The cash payment leaves no financing pending to close the deal. HotelVALORA, as a hotel investment intelligence and valuation platform, monitors transactions daily to keep industry information up-to-date.

Our valuation

HotelVALORA's independent valuation of the 1 Hotel Brooklyn Bridge stands at $211.8M ($1,086,234 per key). The transaction price, $202M, differs by 5% from our valuation. The closeness between our independent valuation and the price actually paid supports the robustness of our method.

Sources: Hotel Dive, The Real Deal, Host Hotels & Resorts and Toll Brothers.