Two months later the hotel’s owner, Harold Thurman, passed away, leaving the estate to his family.
The hotel presented an opportunity for a well-funded investor to buy it at a discount and hold on to it until the city’s tourism industry picked up.
But it was on an expensive ground lease, was landmarked and unionized, required $15 million in facade repairs and had more than 30,000 square feet of vacant retail space.
“This was a scary deal,” said Eric Anton of Marcus & Millichap, the broker representing the sellers. “It had every challenge you can imagine.”
After a year of marketing efforts that fell on deaf ears, a believer from Oklahoma City, Andy Burnett of Burnett Equity, took a chance on the building.
Burnett, an outsider to the city’s hotel industry, signed a contract to take on the burden for $75 million, but when it was time to go firm on the deal, the Delta variant threatened the hotel industry all over again.
“The lenders and equity investors said, ‘Uh oh, we don’t know if we can move forward,’” Anton recalled. It became clear that because of the ground lease and vacant retail, a deal would not be made at that time.
So it was time to get creative. The first step was to go against conventional real estate practices and get the landowner and buyer of the hotel to negotiate the terms of the landlease.
Anton took Burnett to dinner with the landowner’s daughter and her lawyer at Avra Estiatorio, a Midtown dining staple for the city’s real estate deal makers. They instantly hit it off.
“They get along very well. It couldn’t have gone better,” Anton said. They renegotiated the ground lease to more favorable terms for the new owners, but there was still another hurdle.
Burnett wasn’t going to get any financing for the acquisition with virtually all of the hotel’s retail space empty. Getting it leased was the missing piece of the puzzle.
Danny Volk, a veteran of the city’s nightlife scene and a former executive at Catch Hospitality Group, partnered with broker Andy Kim to lure new eateries and cafes into the hotel’s empty retail pockets. Volk predicted he’d be able to score high rents for each of those spaces, though others had doubts.
“Nobody believed us,” added Anton. “The lender didn’t believe us. The owner started to not believe us.”
But in under 12 weeks, the duo leased six vacant spaces to three restaurant groups for 15 years with an asking rent of $250 per square foot.
Once the leasing momentum was strong enough, brokers from Mission Capital found ample financing to close the acquisition, and the deal went through for a cool $55.5 million.
Today, the hotel is open and operating. Guests, though scarce, make appearances in the lobby, and much of the furniture and lighting fixtures that decorated the hotel before the pandemic are still there.
Some of it will be redecorated by Hilton, which is now operating the hotel, Volk said.
But the parts of the Martinique that have held on across more than a century—the tiles, the baroque molding and the marble stairs—will continue to stand the test of time.