The saga of the former Z NYC Hotel in Long Island City took another turn last month when a former creditor on the property sold it for a sinking sum.
Palette Hotels acquired 11-01 43rd Avenue from Taconic Capital for $25.5 million, Crain’s reported. Taconic acquired the former 100-key hotel from Merchants Capital in May 2021 for approximately $38.4 million, three years after Merchants acquired it for $32.3 million.
Taconic lent Merchants $38 million at the property in 2019, allowing it to swoop in for its acquisition two years later.
It’s unclear what Palette has planned for the site; the company and Taconic both failed to respond to requests for comment from the publication.
The site was once the home of Z NYC, a trendy spot in the Queens neighborhood. But like so many of its hospitality counterparts in New York, it couldn’t outrun the effects of the pandemic and closed in 2020.
Hospitality startup Sonder stepped into the void, agreeing to lease the entire property. It ultimately backed out of the deal, however, leading Merchants to sue the company for $2.5 million for allegedly breaching the contract. Sonder went bankrupt last month.
Richard Lou formerly ran a chain of restaurants before diving into the hotel market two decades ago. The Lou family acknowledged its changing business model in 2023 when it christened its business as Palette Hotels. The company’s portfolio is more than 20 properties deep, including the AC Downtown on Maiden Lane in Lower Manhattan.
Taconic Capital — no relation to Taconic Partners — made waves towards the end of last year when it was reported that the hedge fund was winding down its commercial real estate operation and talking to Axonic Capital about acquiring one of Taconic’s funds. A deal was ultimately announced before the calendar flipped.
Elsewhere in Long Island City hospitality, the McSam Hotel Group sold a 142-key property at 38-04 11th Street last year for $40 million. A limited liability company connected to Letap Group principal Jasmin Patel purchased the newly built hotel.
— Holden Walter-Warner
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