China’s Sunshine Insurance Group Co. Ltd has agreed to acquire the Baccarat Hotel in New York City for more than $2 million a room, a record valuation, according to people familiar with the matter.
Sunshine is paying more than $230 million, according to a person familiar with the transaction. On a per-room basis, that would match or exceed the 2012 sale of the Plaza Hotel for $2.04 million to India’s Sahara Group, which hotel data tracker STR Analytics says is the all-time high.
The seller, property investor Starwood Capital Group, built the Baccarat Hotel & Residences luxury hotel and high-end condominium project with Tribeca Associates, a New York real-estate developer.
The opulent 114-room hotel features 15,000 pieces of crystal stemware from France’s Baccarat factory and suites expected to fetch up to $18,000 a night. Starwood will continue to manage the property.
The Baccarat sale would also be the rare instance of a hotel selling before its opening, which is expected within the next month. That makes it a more speculative investment than the storied Plaza Hotel, which has been operating for more than a century.
Sean Hennessey, chief executive officer of Lodging Advisors, a hotel consulting firm, says Starwood’s ability to reach a deal before welcoming the first guest is rare.
“This only occurs in very robust market conditions,” he said. Because hotels aren’t pre-leased like office buildings, the risk of filling the guest rooms now falls to the new owner, rather than the developer, he said.
Still, there are strategic reasons for Sunshine to buy before the opening, he added. The company gets a new asset in a crucial market without having to wait years to develop a similar property.
Read more at The Wall Street Journal.