In early July, Andrew Farkas’ Island Capital Group, in conjunction with MCR and Three Wall Capital, purchased the historic Lexington Hotel, located at 511 Lexington Avenue, NY, for $185 million. Built in 1929, the 725-key Marriott International-branded hotel is known as a staple of hospitality along Lexington Avenue.

Island Capital’s offer comes in at 55 cents on the dollar when compared to the seller’s original purchase price. The seller, DiamondRock Hospitality Company purchased the hotel in 2011 for $333.7 million.

The purchase of the Lexington Hotel marks the first investment through Island Capital’s pandemic war chest, a $350 million fund created to target assets in New York negatively impacted by COVID-19. Farkas describes the purchase decision as a “plug-and-play opportunity” due to the time and money already invested in the renovation of the hotel by DiamondRock. 

Per the American Hotel and Lodging Association (AHLA), hotel markets around the U.S. are facing a “depression,” with New York’s hotel scene included. The purchase by Island Capital is an encouraging contradiction. Come 2022, New York City expects a hospitality rebound, with Andrew Farkas, founder, chairman and CEO of Island Capital, citing increasing tourism and business travel as key components of getting back to normal.

“We are proud to acquire the Lexington Hotel and we are excited about the reopening of the property as we emerge from the pandemic,” Farkas said. “We are confident that New York City will bounce back from what has been a very challenging time in [its] history… we are well positioned to capitalize on the return of [its] booming hospitality industry.”

Throughout the years, the Lexington Hotel has served as an iconic landmark, visited by celebrities, athletes and entertainers. Shut down due to the pandemic in March 2020, the hotel will reopen August 1, managed by MCR as part of Marriott’s Autograph Collection.