King & Grove Hotels has landed a new round of equity financing from Greenwich, Conn.-based investment firm Wheelock Street Capital, following the boutique hotel chain’s split from the Chetrit Group, The Real Deal has learned.
Wheelock will provide a $75 million infusion to jumpstart an expansion of the King & Grove brand, sources familiar with the investors said, marking its first investment in a New York City hotel. Timothy Hodes, a vice president at Wheelock, confirmed that the company was providing the equity but declined to comment on the dollar amount.
King & Grove, led by former Morgans Hotel Group chief Ed Scheetz, broke away from brothers Joseph and Meyer Chetrit last month after years of tenant legal battles delayed their joint conversion of the historic Hotel Chelsea.
Following the breakup, King & Grove will continue to manage the King & Grove New York, King & Grove Lafayette and the Hotel Chelsea in Manhattan; King & Grove Williamsburg in Brooklyn; and Ruschmeyers in Montauk, as The Real Deal previously reported.
The Chetrit Group will run the remaining portfolio, with King & Grove managing the Tides in Miami on its behalf.
The Hotel Chelsea, also partly owned by David Bistricer’s Clipper Equity, had been a fountain of contention between the rent-stabilized tenants at the landmarked property and their new landlords, which bought the building for $79 million in 2011. Construction halted in March when the Department of Buildings issued a stop work order against the developers.
Wheelock, founded in 2008 by veterans of Starwood Capital and Westbrook Partners — Merrick “Rick” Kleeman and Jonathan Paul — has been actively investing in hotels in recent months.
In September 2012, the firm said it would join Hilton and Marriott to buy a 12-building portfolio of hotels, mostly in Texas and the southeastern U.S., from Inland American Real Estate Trust for $116 million. That same month, Wheelock announced its $105 million purchase of three full-service hotels from Sunstone Hotel Investors. The properties include the San Diego Hilton Del Mar, the Minneapolis DoubleTree Guest Suites and the Detroit Marriott Troy.
Also in 2012, Wheelock closed on a $525 million fund made up of pension funds, endowments to foundations and other asset classes.
Neither representatives for Scheetz nor the Chetrit Group were immediately available for comment.