McSam Hotels adds another site to growing portfolio

Real Estate Weekly, August 23, 2006

McSam Hotel's appetite for development sites continues unabated this week with news that Sam Chang's firm has added another site to its fast-growing portfolio.

The developer paid $21.5 million for the 13-story building at 44 West 41st Street in midtown west. It is the latest in a flurry of buys by the developer looking to take advantage of the upturn in the city's hotel market.

In the last several months, Queens-based McSam has snapped up 343-45 West 44th Street for $6.75 million, a parking lot site on West 39th Street, 37 West 24th Street, 121 West 26th Street and 132-38 Fourth Avenue as well as several sites in Brooklyn.

The latest purchase is an 85.6' x 50' building located at the southwest corner of West 41st Street between Ninth and Tenth Avenues, according to Massey Knakal CEO, John Ciraulo, who exclusively represented the seller with broker David Kalish.

Ciraulo said the transaction occurred at a capitalization rate of 3.33% and a gross rent multiple of 13.07. The property sold for $386.41 psf.

The Office of Mental Retardation currently occupies floors 10-12 (six apartments per floor) and The Jewish Board for Family Services occupies the 13th floor, which is configured as a one-apartment community residence including bedrooms, offices, a kitchen, dining room and living room. The property contains approximately 96 residential units (77 studios) on floors 3-13, and 22 commercial units on the basement, plaza, first and second floors.

Ciraulo said the buyer planned to covert the building once the leases expire in two years.

"The increase in demand for hotel space on the far west side, coupled with the unique layout of the residential apartments in this building, positioned it as an ideal hotel conversion," said Ciraulo.

Chang, who is McSam Hotel LLC's founder and owner, also owns MikeSam Construction Corporation, was named "Developer of the Year" by Hilton Hotels Corporation for developing the first Hilton Garden Inn to make it to Manhattan.