June 16, 2010

Knickerbocker site deal closes at $180.5M

By Lauren Elkies

(Updated 2:40 p.m., June 18) Ashkenazy Acquisition, Crown Acquisitions and Highgate Holdings have closed on their purchase of the former Knickerbocker Hotel and an adjacent 10,000 square foot lot on West 42nd Street, according to a source close to the deal.

The sale price: $180.5 million.

The deal was sealed today, two days after it was supposed to close for $173 million, as The Real Deal first reported Friday evening. It wasn’t immediately clear why the price had changed or why the closing had been delayed.

A Crown spokesperson said the building would become a hotel, but not a chain. “We are going to turn it into a beautiful hotel,” he said, noting that Highgate, a hotel operator, would be spearheading the project.

According to a press release from Highgate, “the new owners will undertake a comprehensive mixed use redevelopment initiative. As part of the makeover, the partners will convert the building to an upscale boutique hotel, with high-end retail in its base. In addition, the ownership team will develop the adjoining lot into a new luxury retail complex.”

The buyers are also interested in capitalizing on the 42nd Street side of the landmark building for advertising, the source said.

Istithmar World paid $376 million for the 300,000 square foot 10 story Beaux Arts style building at 1466 Broadway, or 6 Times Square, in 2006.

Istithmar, which is the private equity owner of Dubai government’s investment arm, lost control of the Midtown property in March to lender Danske Bank after defaulting on its $300 million mortgage. Istithmar, the former owner of the W New York Union Square hotel, filed suit earlier this year to challenge a series of bankruptcy filings from Philadelphia-based LEM Mezzanine.

Prudential Douglas Elliman’s Raphael De Niro, his colleague Adam Paskow, along with Christopher Okada, president of corporate real estate advisory group Okada & Company, negotiated the deal on behalf of Ashkenazy. De Niro and Okada declined to comment.

Paskow, Ashkenazy and Danske did not return calls for comment.