Doubletree Metropolitan Hotel

Doubletree Metropolitan Hotel, New York, USA

A mezzanine loan on the Doubletree Metropolitan Hotel, a 760-key hotel located on the corner of 51st Street and Lexington Avenue in Midtown East in New York.

Transaction Background

In March 2010, Rockpoint Fund III acquired the junior mezzanine loan on the Doubletree Metropolitan Hotel, a 760-key hotel well-located on the corner of 51st Street and Lexington Avenue in Midtown East in New York. Rockpoint negotiated the purchase from the lender on a direct basis and the loan was acquired for approximately 56% of its par value, or $300,000 per key (approximately 50% below pricing achieved for similar assets in 2006-2007). At the time of acquisition, hotel RevPAR in New York was showing early signs of improvement driven by both business and leisure travel, following a 25% decline in 2009, the year that the U.S. overall experienced largest drop in RevPAR since 1932. The business plan included monitoring operating performance of the hotel through loan maturity and the consideration of multiple exit scenarios, including both being paid off when the loan matures, and delivering the senior loans at maturity and operating the hotel through stabilization. In December 2010, the loan was repaid in connection with the sale of the asset, and Rockpoint generated strong returns for its investors.