Lotte Hotels & Resorts said Monday it has acquired the land beneath the Lotte New York Palace in Midtown Manhattan for $490 million, completing full ownership of one of New York City’s landmark luxury hotels.
The South Korean hotel operator purchased the site from the Archdiocese of New York following years of negotiations. Lotte has owned the hotel building since 2015, but had leased the land under a long-term agreement that required rent resets every 25 years.
The acquisition removes exposure to sharply rising ground rents in Manhattan, a key source of long-term cost uncertainty.
The Lotte New York Palace, widely regarded as the city’s first five-star hotel, occupies an entire city block near St. Patrick’s Cathedral. Lotte acquired the building a decade ago and rebranded it as Lotte New York Palace.
Industry observers view the deal as part of Lotte’s broader effort to stabilize overseas assets amid higher interest rates and increasing urban land values. The company said the transaction is expected to improve cash flow over time, reduce lease-related liabilities and strengthen its balance sheet.
With both the building and land now under its control, Lotte said it will focus on enhancing the hotel’s long-term competitiveness and using the property as a strategic base to expand its global hotel management business, particularly in North America.
Lotte Hotels & Resorts operates hotels across Asia, Russia and the US. It is a major affiliate of South Korea’s retail giant Lotte Group.
yoohong@heraldcorp.com
