[NYguy]

A little bit more info from Hyatt, which is also looking forward to the development...


https://www.fool.com/earnings/call-t...ference-c.aspx

Hyatt Hotel Corporation (H) Q4 Earnings Conference Call Transcript


Feb 14, 2019
Hyatt Hotels Corp

Mark Hoplamazian -- President and Chief Executive Officer

...The last item I'd like to comment on is a recent development relating to the Grand Hyatt New York, a hotel owned by Hyatt. The hotel was originally opened in 1919, and it became the Grand Hyatt New York in 1980. Prior to 2010, it was the only hotel that Hyatt had in New York. And today, we have 14 hotels and two under development. The hotel is under a long-term lease and sits on top of one of the most important transportation hubs in the world.

We've been engaged in discussions with TF Cornerstone and MSD Partners, the owners of the air rights of Grand Central Station, which is adjacent to the hotel. The new development that they envision involves the construction of a new tower that would include a new Grand Hyatt Hotel. We believe participating in the redevelopment represents the highest and best use of the property for the long-term. And we are committed to working with the developers to move this project forward.

There are a significant number of approvals and other steps that need to be accomplished before a redevelopment could be possible, which we believe will take more than a year to work through. We expect site work for the redevelopment would not begin until 2021 at the earliest. Therefore, we expect to continue to own and operate the hotel through at least the end of 2020. Our current expectation is that we would ultimately sell the hotel and ground lease interest that we have to the development entity that would do the redevelopment and enter into a long-term management agreement for a new Grand Hyatt Hotel upon completion.

We welcome being part of such an important project with such experienced and accomplished developers. And we are also very excited by the prospects of a new world-class Grand Hyatt Hotel. Ours is an iconic location in the center of Manhattan. And we are committed to a long-term presence in that area. As you can imagine, this is a complicated deal given the nature and location of the property. And we are still working through details of various agreements with TF Cornerstone and MSD Partners. We will share additional details on the potential redevelopment as it evolves over time.

Jared Shojaian -- Wolfe Research -- Analyst

.....you mentioned the Grand Hyatt. I appreciate the details there. But how are you thinking about that in terms of your longer-term disposition plan and allocation of capital? Would that be incremental to your $1.5 billion target? Would you consider recycling the proceeds into other hotels? And as you look at your entire portfolio of assets, are there any properties that you would consider not being available for sale, whether that's for strategic reasons, tax reasons, or anything else that you might be considering?

Mark Hoplamazian -- President and Chief Executive Officer

Thanks, Jared. With respect to the Grand Hyatt New York and how we think about it, the steps that we're taking right now are consistent with the overall direction that we've taken, which is to continue to move to an asset-lighter balance sheet. So, we looked at that opportunity in the context of several different factors. One being that the last -- the CAPEX profile for the property is driven in part by the fact that the last major renovation that we did was in 2011 at a cost of a bit over $120 million. And so, as we look forward, a CAPEX profile that suggested that this is an appropriate time for us to think about doing something different with the property.

As to how we ultimately will treat the proceeds from the sale, we will make that determination as we get closer to the time of actually selling the hotel. So, we've got a framing for our permit sell down commitment, which is at the $1.5 billion level that we described and talked extensively about last year. And we've also engaged in a number of recycling transactions. So, I think exactly how we end up treating those proceeds will be determined when we get closer to disposition.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Excellent. Great. And then, just one other clarification was around the New York asset. And, again, appreciate the color that you did give us on that because I think we saw that in some of the New York real estate circles. So, the question I have on that is I think you mentioned -- it is a ground lease asset. But then, I think you also said that you may have some interest in the ground lease. So, could you just give us a little more color because we're undoubtedly gonna be trying to think about value there? And it'll depend a lot on whether or not it's ground leased or how much of the ground lease you own.

Mark Hoplamazian -- President and Chief Executive Officer

Okay. Excuse me. Given the transportation on which that property sits, all the land is owned by government entities, and we are the lessee of the land and owner of the improvements. So, that's the status that we have in that property. And our intention would be to sell the property, therefore, inclusive of the ground lease interests to the development group that's been formed to pursue this new redevelopment on the site. The adjacency of our site with -- it's contiguous with the Grand Central Station parcel has allowed the development group to take advantage of certain opportunities to make that total redevelopment and opportunity more efficient and effective than it might otherwise be. So, it's a bit of a special opportunity with this group that owns the air rights at Grand Central.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Right, because you can only use them if it's contiguous, I think is one of the key rules around air rights.

Mark Hoplamazian -- President and Chief Executive Officer

Well, there are some transfer abilities. It's not as powerful though as might exist if you're contiguous.

Shaun Kelley -- Bank of America Merrill Lynch -- Analyst

Okay. Great. Appreciate the color there. And look forward to hearing more about that.