The Art of Assemblage & Sternlicht's Media Engineering

The Art of Assemblage

“You can only get away with this once,” Sheldon Solow told a Times scribe in 1970, upon assembling the holiest of holies, a 62K-square-foot site on West 57th St. that would host his first office building. “We’re in barracuda land.” 🦈 

Solow’s assemblage, which he stitched together through stealthy purchases through beards and even a bit of divine dealmaking w/ the Mormon Church, took 5Y and cost $12M. In hindsight, that is a legendarily low number given that the 1.5M sf tower he built, 9 West 57th Street, instantly became Manhattan’s alpha office building and held on to that mantle for decades.

Five decades on, his son looks to be attempting a similar coup across the street.

Assemblage (Cont.)

Stefan Soloviev, who toggles between being an agricultural baron and a Manhattan dealmaker, is reportedly the $67M buyer of APF’s distressed 57th St. plot, per Bloomberg, though I’m hearing that this is not definitive and there may be another twist in the tale TK. The debt on the property at 24 W 57th St. was snapped up in Oct. by the modern master of assemblage, Gary Barnett, who knows a thing or two about high-stakes parcels (real heads will recall that he extracted $1,400/foot from Steve Roth for a tiny sliver of land inside Roth’s 220 CPS). Barnett has now been paid off on the APF debt, insiders confirmed.

When Barnett bought the note, Soloviev had insisted that he had no use for the property. He told TRD that “I have enough square footage to do what I want there,” re. to the assemblage at 6-20 West 57th Street that Soloviev & his dad before him had stitched together for $300M+. His eponymous group’s CEO Michael Hershman told Bloomberg that the firm would explore a number of options for the assemblage, including a HQ-worthy office building and a condo-hotel project. The area, he said, “has all of a sudden become a pretty hot environment for investment.”

Sternlicht: What’s in a Name?

"Commercial real estate is a tiered business,” The Promote wrote in March. “At the bottom you have the chumps who do the work, hit the job sites, walk the properties, lay the linens. The higher up you go, the more financial engineering comes into play. By the time you’re Barry Sternlicht, that (with a healthy sprinkle 🧂 of media engineering) is most of the game.” Sternlicht had just revealed that his FO-sponsored SPAC Jaws Mustang was picking up a stake in his Starwood Capital’s hotel portfolio – at the time, Jaws Mustang was already valued at $300M, although it had no holdings and just $23M in cash. 🤷‍♀️ 

Yesterday, DealBook, the NYT’s highbrow biz newsletter, dropped an interview w/ Sternlicht in which he revealed he was resurrecting the Starwood Hotels brand. That was it – that was the news. Now as a media person, I understand (I really do) how hard it is to turn down an opportunity like this – which putz rejects a sit-down w/ a titan? – but was there more to this than Sternlicht’s star power? To find out, I turned to my friend @somehotelguy, a hotel exec (vetted, legit) who previously wrote a memorable breakdown of the Marriott-Sonder deal for us. Here’s what he had to say. Enjoy! - HS 

By Some Hotel Guy

Barry’s relaunch of Starwood Hotels shows why he’s firmly in The Twelve Olympians of media engineering. I spent 10 years at Starwood Hotels, and his announcement both tugged at my nostalgic heartstrings and made me cackle.

To be fair to him, Barry is open about what this revival does: The Times paraphrased him thus: “Mr. Sternlicht believed getting [the Starwood Hotels name] back would raise the company’s profile and help with recruiting.” 

HOT (Starwood’s old ticker) cultivated the stickiest of customers by having the best loyalty program in the business, SPG, and a collection of cool & sophisticated brands populated by some of the world’s most iconic hotels – seriously, check out the Hotel Marqués de Riscal. Collection brands, the Heavenly Bed, redemptions w/o blackout dates, guaranteed late checkout… Barry drove ALL of that.

But on what foundation? HOT was built on the bland might of Sheraton and Westin, which contributed massive fee loads and allowed the company to invest heavily in both. (Editor’s note: Another Starwood alum who worked on hospitality acquisitions there made a similar point, saying: “The W didn’t mean a fuckin’ thing to the financials of HOT – It was the supertanker Sheratons that did $20M of EBITDA each that mattered.” 🚢 )

Moreover, the long-term (and difficult to terminate) nature of those legacy Sheraton and Westin contracts meant owners were essentially force-fed the costs needed to build that adored consumer platform. And it was the weight of those costs that ultimately broke the company’s back: A generous loyalty program, exacting renovation standards and a dogmatic approach to brand meant the company could never grow the way its key rivals did, making a decision to sell inevitable.

Will the ‘new’ Starwood Hotels have Barry’s uncompromising eye on cool and quality? Yes. Will it be powered by a cash-flow engine that allows it to be both large and cool while so richly rewarding loyal customers? No chance.

Despite all this, the media coverage has been BREATHLESS. Not just industry rags or travel-oriented media either - if The Gray Lady is giving primo ink to your recruiting announcement, you’re clearly at the top of the game. 🖋️ 🐐 

Swire Officially Tires of Brickell Supertall

“I buy real estate every morning when I wake up. Whatever the value is today, if I don’t sell it at that number, it means I’m a buyer at that number. The only caveat of that is tax.” - Joey Tabak 

After playing a game of “will they, won’t they?” for about a year, we now have a definitive answer: they won’t. Swire & Related Cos. are no longer moving forward on their 1,000-foot-tall office tower, dubbed One Brickell City Centre, and Swire has tapped CBRE to sell the assemblage.

“The current office market has been challenging and the pre-leasing for that specific scheme has not materialized in the way that we had hoped,” Swire prez Henry Bott told Bloomberg – i.e. no luck w/ an anchor tenant. Swire hopes to take proceeds and invest them into a Mandarin Oriental hotel/condo project it’s building on Brickell Key, where it’s already sold $800M worth of units.

Related only had an interest in the One Brickell City Centre development; the megabuilder does not have an equity stake in the parcels themselves, and is now working w/ Ken Griffin on Citadel’s upcoming HQ in the area. And there’s been plenty of development site action in Brickell overall, most notably Oak Row Equities’ $520M in-progress deal to purchase Aimco’s waterfront site for $122M/acre. 🐃 

Spitzer Shops Frou-Frou Rental

When Bernard Spitzer passed in ‘14, his son Eliot Spitzer inherited a ≈ $1B portfolio of primo real estate, including several luxury rentals on the UES. The younger Spitzer threw himself fully into his 2nd act – he had resigned as New York Gov. in ‘08 – and embarked on ambitious undertakings such as a new development along the Brooklyn waterfront. The Manhattan properties, though, remained the mainstay of the empire, raking in top-tier rents. Now, Spitzer and his longtime partner, the Winter family, are looking to sell one of those cash cows, The Promote has learned: they’re shopping 800 Fifth Ave., a 208-unit rental, via Newmark (Harmon/Spies, who repped Spitzer/Winter on their $1.8B ‘15 sale of the Crown Building to Sutton/GGP). Unclear what the sellers hope to fetch for the property, which has partial/full condo redevelopment potential – it’s a few blocks north of the Aman New York hotel-condo, which recently sold a unit for $11K+/foot.

The property was once a mansion owned by Jabez Bostwick, a co-founder of Standard Oil. It later sat vacant for decades until Bernard tore it down and built a 33-story tower.

Quickies

• Norman Foster’s empire of image control

• Pecking order: NYC’s most valuable office leases of ‘24, ranked 🐔 

• Lutnick settles suit over $50M Newmark bonus

• Second fiddle: Investors offloaded record volume of PE stakes in ‘24 🎻 

• Can you spare $7/foot? Lincoln Property to auction off Houston office complex 

• ICYMI: Here’s who’s rushing into Texas’ property-tax loophole

Unquotable Quotes