Korman Buys BlackRock Stake in Midtown AKA Hotels Portfolio
Larry Korman’s AKA Hotels bought its partner BlackRock out of a portfolio of Midtown extended-stay properties in a deal valued at $220 million.
Korman Communities acquired BlackRock’s majority stake in the three extended-stay hotels at 330 East 56th Street, 123 West 44th Street and 42 West 58th Street, The Real Deal has learned.
Korman had owned a minority piece of the 322-key package that operated under its AKA Hotels Residences flag, which offers fully furnished apartments for long stays. BlackRock put its stake up for sale and drew interest from investors who considered converting the hotels into apartments. But ultimately Korman bought the stake and consolidated its ownership.
The deal values the portfolio at slightly more than $680,000 per key.
Representatives for Korman Communities and BlackRock did not immediately respond to requests for comment. A Newmark team led by Adam Spies and Adam Doneger negotiated the sale.
Pennsylvania-based Korman stitched together the portfolio in 2006 and 2007 for $255.5 million, property records show. The fifth-generation family firm headed by co-CEO Larry and Brad Korman has a $4.7 billion portfolio of more than 10,000 apartments, rooms and suites in the United States and London, according to its website.
Last summer, the company sold its Smyth hotel in Tribeca to the Republic Investment Company and Capstone Equities for $41 million.
New York’s hotel industry has struggled in recent years because of rising taxes, higher union labor costs and the Covid pandemic. The city in late 2021 passed a law that effectively bans new hotel construction, and the lack of new supply has helped buffer the values of existing properties.
Another pain point was the contract with hotel and bar/restaurant workers that owners complained squeezed profits. Earlier this year the Hotel and Gaming Trades Council and the Hotel Association of New York City reached an agreement on a new, eight-year contract covering nearly 30,000 workers at more than 250 hotels.
It includes the largest pay increases in the union’s nearly 100-year history; wages are scheduled to climb by more than 50 percent on average over the contract’s term, putting housekeepers on track to earn more than $100,000 a year by the sixth year.
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