By Roland Li
Hotelier Sam Chang has sold another property, 32 Pearl Street, to Hersha Hospitality Trust for $28.7 million, according to city records.
Chang purchased the low-rise 32 Pearl Street, along with the adjacent 6 Water Street, for $56 million in 2008. The sellers were a partnership of Richard Breton of Breton Properties, Stephen Meringoff and Jay Shidler, the Post reported at the time.
The two buildings’ main appeal was development rights: the entire parcel can be built to 125,000 s/f and Chang bought the site for around $440 per buildable s/f, according to Eastern Consolidated, which brokered the 2008 deal. Chang had planned a tall hotel on the site, but the small buildings remain standing. He still owns 6 Water Street, according to city records. Officials at McSam Hotel Group weren’t available to comment.
Ashish Parikh, chief financial officer of Pennsylvania-based Hersha, said it plans to build an 81-room Hampton Inn at 32 Pearl Street and is not buying 6 Water Street. According to Hersha, it acquired 32 Pearl Street for cash and converted its $8 million mezzanine loan to equity.
However, instead of demolishing 32 Pearl Street, Hersha appears to be planning a rehabilitation and conversion, and possibly adding additional floors to the existing seven-story building. According to PropertyShark, 32 Pearl Street has development rights of up to 83,970 s/f. The conversion is expected to cost around $4.5 million and be completed in the first quarter of 2012, said Hersha.
Chang’s McSam Hotel Group has been unloading properties in recent months, and Hersha, a longtime partner of Chang, has been a frequent buyer.
Earlier this year, Hersha bought McSam Group’s stalled Hyatt Union Square Hotel site for $104.1 million and a Holiday Inn Express at 126 Water Street for $36.7 million. Hersha also owns another Hampton Inn at 320 Pearl Street. According to building records, Sam Chang was involved in that property as recently as 2008.
Last month, McSam Hotel Group also sold a development site at 33 Beekman Street, across the street from the Frank Gehry-designed 8 Spruce Street.
The sales have been a sharp reversal for Chang, who remains one of the most prolific hotel developers in the city. An immigrant from Taiwan, Chang built an empire of affordable hotels, targeting New York tourists, including a “three pack” of hotels on West 39th Street.
But as the recession lingered, Chang began selling parts of his portfolio, including the three hotels on West 39th Street. His planned projects throughout the city stalled, no doubt hurt by lack of construction lending, and some of the unfinished parcels have since traded.