A Toronto-based investor is making a fresh bet on Midtown, picking up a 30-story Courtyard by Marriott just off Fifth Avenue for roughly $33 million and lining up a multi-year overhaul that will keep the hotel in the Marriott family.
Knightstone's hospitality arm has acquired the leasehold interest in the Courtyard by Marriott New York Manhattan/Fifth Avenue at 3 E. 40th St., a 189-room tower near Bryant Park. The buyer says it plans a renovation and repositioning of the property while retaining the Marriott flag, so guests and neighboring businesses should see business as usual in the near term even as capital work is quietly teed up behind the scenes.
Seller Disclosures And The Numbers
DiamondRock said the sale closed May 1, 2026, and that it sold its leasehold interest in the hotel for $33.0 million. CoStar also reported the transaction and pegged the price at about $174,603 per room. According to a press release filed with the SEC and distributed via PR Newswire, the company baked roughly $12 million of near-term capital spending and a contractual ground-lease increase into its view of the sale's stabilized capitalization rate.
Public transfer records show the deed was recorded at approximately $32.7 million, per PincusCo property-transfer listings.
Buyer Plans And Management
Knightstone Hotel Group, the hospitality division of Toronto-based Knightstone Capital Management, said it will reposition the asset and has tapped HEI Hotels & Resorts to manage the property. "We see a compelling opportunity to continue growing our hospitality platform in the U.S.," Knightstone CEO Alan Perlis told HotelBusiness, calling the Midtown location and floorplates well-suited for a "transformative renovation."
The purchase follows Knightstone's 2025 U.S. entry and signals continued cross-border investor appetite for value-add Manhattan hotels, especially for owners willing to take on construction headaches in exchange for potential upside.
Ground Lease And Long-Term Obligations
The deal hands over operational control but not the dirt under the building. DiamondRock's regulatory filings note that the hotel's ground lease can run through October 2121 if the owner meets a capital-improvement requirement of at least $7.0 million in work by the end of 2026, as shown in the company's SEC filings. That ground-lease structure and the near-term capital needs were cited by DiamondRock in explaining why the asset no longer cleared its investment thresholds and why it tweaked 2026 guidance after the sale.
For Midtown, the trade is another sign that there is still a market for hands-on operators prepared to pour money into aging hotels, provided the location is strong enough and the upside looks worth the renovation bill.
