Hyundai Group eyes NYLO hotel in Manhattan

An affiliate of the Hyundai Group is looking to buy Lehman Brothers Holdings Inc.’s NYLO hotel in Manhattan, according to two people with knowledge of the talks, indicating a foray by the South Korean company into New York real estate.

Hyundai Group is among several bidders for the 291-room hotel on the Upper West Side, said the people, who asked not to be identified because the negotiations are private. A deal hasn’t been reached with any of the potential acquirers, one of the people said.

Hyundai Group is joining investors from around the globe in seeking to buy U.S. real estate, particularly in big markets such as Manhattan that are seen as safe havens for cash. The Seoul-based company’s asset-management unit acquired office buildings worth $361 million in New Jersey and the Washington, D.C., area within the past six months, according to Real Capital Analytics Inc., a property-research firm, which doesn’t show any New York purchases by Hyundai Group in its data.

“Hyundai’s expansion into equity investment in U.S. real estate follows similar moves by other Asian conglomerates seeking to diversify their portfolio,” said Ben Thypin, an analyst at New York-based Real Capital.

Kimberly Macleod, a spokeswoman for Lehman Brothers, declined to comment. Calls and e-mails to Hyundai in Seoul weren’t returned.

Asian investors, led by China, have been helping to propel commercial real estate values in New York to new peaks. Beijing- based Anbang Insurance Group Co. this month agreed to buy a 26- story office tower at 717 Fifth Avenue from Blackstone Group LP, according to two people familiar with the matter, after paying $1.95 billion for the Waldorf Astoria on Park Avenue in the largest deal ever for a U.S. hotel.

The NYLO hotel is one of Lehman Brothers’s remaining real estate holdings, which totaled about $1.6 billion as of an Oct. 1 filing. The defunct investment bank, which filed for the biggest bankruptcy in U.S. history in part because of souring bets on commercial property, spent about $20 million to renovate the NYLO before putting it up for sale in November.

Douglas Harmon of brokerage Eastdil Secured is marketing the property.

This isn’t Hyundai Group’s first entry into the hospitality business. The firm was part of a group of lenders that provided 585 million pounds ($903 million) to refinance debt on 61 hotels in England in 2013, according to Real Capital.

Hyundai Group doesn’t include the automaker of the same name. Hyundai Motor Co. split from the company in 2000, when the conglomerate was burdened with heavy debt following the Asian financial crisis and the group’s founder, Chung Ju Yung, was dividing assets among his sons. The spinoff created another company, Hyundai Motor Group, which also includes automaker Kia Motors Corporation.

Bloomberg