HVS International : 2005 Manhattan Hotel Market Overview

Overview of Sales Transactions in Manhattan

The table on the following pages sets forth an overview of Manhattan hotel sales from 1992 through March of 2005.

Property	Date of Sale	Address	No. of Rooms	Seller	Buyer	Price	Price per Room
Clarion Park Avenue	Pending	429 Park Avenue South	60	Palace International Properties, Ltd.	Park Avenue Hotels New York LLC	$11,350,000	$189,167
Rihga Royal*	Mar-05	151 W 54th St.	506	Lehman Brothers	Blackstone Real Estate Group	183,000,000	361,660
The Stanhope Park Hyatt*	Jan-05	995 Fifth Avenue	185	Hyatt Hotels�	Intell Management	70,000,000	378,378
Sold for Condo Conversion
Sheraton Russell	Dec-04	45 Park Avenue at 37th Ave	146	Starwood Hotels & Resorts	SJP Residential Properties	40,250,000	275,685
Clarion Fifth Avenue*	Dec-04	3-5 East 40th Street	189	ING Realty Partners	DiamondRock Hospitality	34,375,000	181,878
Park Central	Dec-04	870 Seventh Avenue	933	H. Park Central, LLC	Highgate Hotels	215,000,000	230,439
Courtyard Midtown East	Dec-04	866 Third Avenue	307	866 3rd Next Generation Hotel L.L.C.	DiamondRock Hospitality	75,000,000	244,300
The Plaza�	Oct-04	768 Fifth Avenue	805	Plaza Operating Partners, Ltd.	Elad Properties	675,000,000	838,509
Sold for Condo Conversion (except for 150 rooms, as originally conceived)
Days Hotel	Aug-04	790 8th Avenue	368	Hampshire Hotels & Resorts	Highgate Hotels	58,000,000	157,609
Howard Johnson Plaza	Aug-04	851 8th Avenue	300	Hampshire Hotels & Resorts	Highgate Hotels	47,200,000	157,333
Paramount Hotel	Jun-04	235 West 46th Street	593	Ian Schrager Hotels	Becker Ventures, LLC	126,500,000	213,322
				(as renovated assuming a $50-million infusion)		176,500,000	297,639
Quality Inn Times Square	May-04	157 West 47th Street	160	Hampshire Hotels & Resorts	Cushlin Limited	20,200,000	126,250
The Mansfield*	May-04	12 West 44th Street	127	Credit Suisse First Boston	Ark Investment Partners, LP	12,500,000	98,425
InterContinental Central Park South*	Apr-04	112 Central Park S.	211	InterContinental Hotels Group	Anbau Enterprises	63,500,000	300,948
Sold for Condo Conversion
The Shoreham*	Jan-04	33 West 55th Street	177	Credit Suisse First Boston	Ark Investment Partners, LP	14,500,000	81,921
Empire Hotel	Dec-03	44 West 63rd Street	381	Ian Schrager Hotels/NorthStar Capital	Joseph and Jack Chetrit	80,000,000	209,974
Sold for Condo Conversion
Helmsley Hotel Windsor	Sep-03	100 West 58th Street	244	Leona Helmsley	Joseph and Jack Chetrit	55,000,000	225,410
Sold for Condo Conversion
Gorham Hotel	Sep-03	136 West 55th Street	117	Private Investors	Richard Born and Ira Krukier	23,100,000	197,436
Roger Williams*	Sep-03	131 Madison Avenue	187	PTG Madison 31 Trust	JRK New York Hotel Partners	26,500,000	141,711
Hampton Inn Chelsea	Aug-03	108 West 24th Street	144	Chelsea Grand East, LLC	CNL Hospitality/Hersha Hospitality	28,000,000	194,444
Loews Metropolitan	Jul-03	Lexington Ave at 51st St.	722	Loews Hotels	Whitehall Street Real Estate Fund	110,250,000	152,701
				(as renovated assuming a $20-million infusion)		130,250,000	180,402
Doral Park Avenue (now Kimpton Hotel)	Jul-03	70 Park Avenue	188	Hayman Company	Kennedy Associates	38,240,000	203,404
			205	(as renovated and expanded assuming a $19-million infusion)		57,240,000	279,220
Hotel Wales	Nov-02	1295 Madison Ave.	87	PTG Wales Trust	DLJ Real Estate Capital Partners II LP	24,000,000	275,862
Fitzpatrick Hotel	Aug-02	127 East 55th Street	130	British Airways	Hotel Properties Ltd, Singapore	30,690,000	236,077
Algonquin Hotel	Jun-02	59 West 44th St.	174	Camberley Hotel Co./Olympus RE	Miller Global Properties	41,400,000	237,931
Delmonico Hotel	Nov-01	502 Park Avenue	152	N/A	Donald Trump	115,000,000	756,579
Sold for Condo Conversion
The Barbizon	May-01	140E 63rd St.	300	Ian Schrager Hotels	Berwind Property Group	96,000,000	320,000
Rihga Royal*	Feb-01	151 W 54th St.	500	Royal Hotels Ltd.	Thayer Lodging Group, Inc.	193,000,000	386,000
The Carlyle	Jan-01	35 E 76th St�	194	Mr. Norman Peck (et al)	Maritz Wolff & Co	127,500,000	657,216
Downtown Athletic Club Hotel	Oct-00	19 West St.	116	CBA Real Estate Partners 19 West Hotel (LLC)	Upper West St LLC	20,000,000	172,414
The Sutton	Jun-00	330 East 56th St.	84	Hong Kong & Shanghai Hotels	Glenwood Management	35,000,000	416,667
Westpark Hotel	May-00	308 W 58th St.	99	The Leo Rosner Foundation, Inc.	Berit Reality	11,500,000	116,162
Sofitel New York	Mar-00	45 W 44th St.	398	Accor North America Corporation	Finova Capital, Pitney Bowes	77,177,000	193,912
Fulton Plaza Apartment Hotel	Jan-00	106-108 Fulton St.	85	Fulton/Max International	Pace University	20,000,000	235,294
Days Inn Midtown Manhattan	Dec-99	790 8th Avenue	368	Loews Corp.	Hampshire Hotels & Resorts, LLC	53,877,844	146,407
Howard Johnson Plaza	Dec-99	851 8th Avenue	300	Loews Corp.	Hampshire Hotels & Resorts, LLC	43,922,156	146,407
The Stanhope Hotel*	Dec-99	995 Fifth Avenue	150	Colony Stanhope Partners	Hyatt Partnership Interests	58,000,000	386,667
Hotel Lexington	Sep-99	511-515 Lexington Ave.	710	Lex Taj Corporation	Highgate Hotels	105,000,000	147,887
				(as renovated assuming a $13-million infusion)		118,000,000	166,197
Westin (now InterContinental)	Jul-99	112 Central Park S.	214	Starwood Hotels & Resorts	Bass Hotels International	62,500,000	292,056
Essex House	Mar-99	160 Central Park S.	597	Essex Associates	Strategic Hotel Capital	260,000,000	435,511
Four Seasons Hotel*	Feb-99	West 57th St.	370	A Hong Kong Consortium (50.1%), Lai Sun Hotels (49.9%)	57 BB Property, LLC	275,000,000	743,243
Doral Park Avenue	Jan-99	49th St. & Lexington	188	John Hancock Mutual Life	Hayman Company	43,000,000	228,723

* Known leasehold and/or partial interest sold

Property	Date of Sale	Address	No. of Rooms	Seller	Buyer	Price	Price per Room
Swissotel New York	Dec-98	56th St. & Madison	495	Blackstone Group	Host Marriott	$179,123,000	$361,865
Five Gotham Hotels**	Jul-98	Manhattan	531	Gotham Hospitality Group	CS First Boston	132,000,000	248,588
				(price adjusted to fee simple equivalent)		156,862,710	295,410
Radisson Empire & Barbizon	May-98	Manhattan	675	Affiliates of Metro Media Corp.	Ian Schrager Hotels and NorthStar	169,000,000	250,370
St. Moritz on Central Park*	May-98	50 Central Park S.	681	FAI Insurance Limited	Ian Schrager Hotels and NorthStar	87,000,000	127,753
				(price adjusted to reflect a $93,000,000 renovation)		180,000,000	264,317
Marriott East Side	Feb-98	525 Lexington Ave.	643	Marriott Corporation	Strategic Hotel Capital	191,300,000	297,512
Luxury Collection Hotel New York	Jan-98	112 Central Park So.	214	Sheik Abdul Aziz bin Ibrahim al-Ibrahim	Starwood Lodging	78,030,606	364,629
Hotel Beverly	Nov-97	125 E. 50th St.	188	Highgate Corporation	Manhattan East Suite Hotels	41,000,000	218,085
Hotel Pennsylvania	Aug-97	401 Seventh Ave.	1,705	Ascot Associates & 15 Penn Plaza	Leisure Venture Holdings, Ltd.	160,000,000	93,842
UN Plaza Hotel	Jun-97	First Ave. & 44th St.	427	United Nations Development Corp.	Regal Hotels International	102,000,000	238,876
Quality Inn - Fifth Avenue*	May-97	11 E. 40th St.	186	Journey's End Corporation	Westmont Hotels	24,000,000	129,032
				(price adjusted to fee simple equivalent)		33,412,000	179,634
Plaza Ath�n�e	Apr-97	37 E. 64th St.	153	Forte Hotels PLC	Plaza Ath�n�e Hotel Corp., Ltd.	68,800,000	449,673
Algonquin Hotel	Mar-97	59 W. 44th St.	165	Caesar Park Hotels	Camberley Hotel Co./Olympus RE	30,000,000	181,818
Consulate Hotel*	Nov-96	224 W. 49th St.	200	B.S.D. & J., Inc.	Consulate Hotel Associates, LLC	13,000,000	65,000
				(price adjusted to fee simple equivalent)		21,143,000	105,715
Marriott Financial Center	Dec-96	85 West St.	504	Swiss Bank	Host Marriott	101,000,000	200,397
Doral Tuscany/Doral Court	Sep-96	120 & 130 E. 39th St.	121/199	Carol Management Corp.	Starwood Lodging	42,000,000	131,250
Mayfair Hotel	Aug-96	610 Park Avenue	201	Teachers Insurance	Colony Capital	61,000,000	303,483
Four Seasons Hotel*	Aug-96	57 E. 57th St.	367	Hotel Investment Group	Hotel 57, led by Lai Sun Group	195,000,000	531,335
				(price adjusted to fee simple equivalent)		239,000,000	651,226
Dorset Hotel	Feb-96	30 W. 54th St.	319	Unknown	Museum of Modern Art	50,000,000	156,740
Vista International*	Dec-95	3 World Trade Center	820	Port Authority of NY & NJ	Host Marriott	141,500,000	172,561
				(price adjusted to fee simple equivalent)		153,000,000	186,585
Doral Inn� (now The W Hotel)	Sep-95	555 Lexington Ave.	652	Carol Management Corp.	Starwood Lodging	71,000,000	108,896
Park Central Hotel	Sep-95	870 Seventh Ave.	1,270	Park Centre Associates	H. Park Central LLC, et al.	60,000,000	47,244
The Plaza	Aug-95	768 Fifth Avenue	808	Plaza Operating Partners	CDL Hotels/Prince Alwaleed	325,000,000	402,228
Hotel Macklowe/Millennium	Dec-94	145 W. 44th St.	629	Chemical Bank	CDL Hotels International	97,500,000	155,008
Barbizon Hotel	Nov-94	140 E. 63rd St.	345	Bank of Tokyo, et. al.	Metromedia Company�	31,500,000	91,304
Marriott East Side	Oct-94	525 Lexington Ave.	664	Mitsubishi Trust and Banking	Morris Bailey and Host Marriott	55,000,000	82,831
Morgans Hotel	Aug-94	237 Madison Ave.	113	237 Holding Corp./Bank of Tokyo	Morgans Hotel Group	12,000,000	106,195
Hotel Millenium	Jun-94	Fulton at Church St.	561	Kalikow Fulton Church Realty	CDL Hotels International	75,000,000	133,690
The Palace*	Oct-93	Madison Avenue	965	Helmsley Hotels	Amadeo Hotels (Brunei)�	202,000,000	209,326
Parc 51/Michelangelo	Jun-92	152 W. 51st St.	178	Park Lane Hotels	Starhotels	38,900,000	218,539
Omni Berkshire	Mar-92	22 E. 52nd St.	420	Aer Lingus	Wharf Holding, Ltd.	83,500,000	198,810

* Known leasehold and/or partial interest sold ** Per-room price, based on a per-room allocation of a package price

Michael R. Bloomberg
Mayor of the City of New York

As the "WORLD'S SECOND HOME," New York appeals to business and leisure travelers from every corner of the globe. In fact, we welcome more international visitors than any other destination in the United States with more than 5.3 million international visitors to our great city in 2004, an increase of more than 10 percent. The readers of Travel + Leisure confirmed our popularity by naming New York as the top city in the United States and Canada once again at the 2004 World's Best Awards.

Millions of people are discovering the rich diversity of our cosmopolitan city. New York City's accommodations, attractions, dining, entertainment, shopping, sporting events, theater, and performing arts are the best in the world. With 70,523 hotel rooms, New York offers visitors an unparalleled choice and new hotels are always being built, with new properties planned in Harlem and a major expansion in Brooklyn.

The thriving arts community welcomed the redesigned Museum of Modern Art, the Alvin Ailey American Dance Theater, and the Rubin Museum; while the forward momentum on the creation of a full Convention Corridor further secures New York's position as a top tier city for meetings, conferences, and trade shows. Successes such as the Republican National Convention, "The Gates, Project for Central Park," International Pow Wow, the 2010 Super Bowl, and the distinction of being the U.S. candidate for the 2012 Olympic Bid also demonstrate that New York is the premier destination for hosting world-class events.

There has never been a better time to visit the greatest city on earth. New York remains the safest large city in the United States and forecasts indicate that more than 40 million visitors will come to New York in 2005. Expect those visitor numbers to increase as more people experience the best of the Big Apple.

As a result of the previous recession in the early 1990s, limited transactions occurred in 1992 and 1993, followed by moderate increases in sales activity in 1994 and 1995. The hotel industry in Manhattan experienced significant sales transaction activity from 1996 through the first half of 2000, due to the upswing in hotel operating profits as well as the increased availability of debt financing. Hotel REITs and operating companies were in a strong acquisition mode during this period, which, coupled with the relatively low cost of debt and equity, helped to enhance hotel values. The downturn in lodging REIT and C-Corp. stock prices, as well as the uncertainty of the capital markets, contributed to a slowdown in sales activity as of the second half of 2000.

Following the events of September 11, 2001, hotel transaction activity further declined due to the uncertainty regarding hotel operating performance and stricter underwriting by lenders. Well-capitalized owners were generally holding onto their assets until market conditions normalized. Those owners facing debt-service shortfalls modified loan payment terms with their lenders or brought in new equity to the investment. Few owners have been forced to sell their assets.

Since the end of 2001, numerous buyers have raised capital to purchase hotels at levels below replacement cost. Declining hotel performance in 2002, followed by the war in Iraq and the SARS epidemic in the first half of 2003, caused many transactions to stall due to a gap between seller and buyer expectations.

In the last quarter of 2003, hotel investors started to perceive the hotel industry in Manhattan as very attractive, with expectations of increases in occupancy as well as average rate; buyers started to meet seller expectations. We note that all five sales that occurred in 2003 took place during the second half of the year, as the Manhattan lodging market was starting to turn around.

In 2004, the sales activity intensified as the market rebounded at a tremendous pace, and in total 12 hotels were sold during 2004, the highest number in the historical period reviewed. Hotel investors currently have an upbeat perspective of the Manhattan lodging market, as occupancy and average rate are expected to experience significant growth over the next few years. In addition, financing appeared more readily available in 2004, as lenders also seemed to be optimistic about the Manhattan lodging market.

Two hotels sold in the first three months of 2005, while a third sale was pending as of the end of the first quarter of 2005, and several hotels are anticipated to change ownership in 2005 and beyond. We expect significant sales transaction activity in the next few years, similar to the activity that followed the previous recession of the early 1990s.

We note that from 1992 through March 2005, the highest per-room price was achieved by The Plaza, at roundly $839,000, in October of 2004 for condominium conversion of the majority of the existing guestrooms.

Twelve transactions were identified in 2004; the following is a synopsis of each of these sales.