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New York

Once-stalled boutique hotel back on track

English private equity firms buys 31st Street site for $13.5M

Plans for a new, 260-room hotel at 11 East 31st Street are back on track, thanks to a cash injection from a London and Hong Kong-based alternative investment firm, an investor in the project told The Real Deal today.

Cube Capital purchased the 2,156-square-foot site from Geolo Capital for $13.5 million earlier this month in partnership with developer Simon Development Group, according to public records filed with the city today. Minority investors in the deal include Eagle Point Hotel Partners and KSNY.

Commune, a joint partnership between Thompson Hotels and Joie De Vivre Hotels, will manage the 33-story, 260-room boutique hotel, which is slated to have a 125-seat restaurant and a rooftop bar.

Construction is slated to begin in early 2013, with the hotel opening in 2014 or early 2015, according to Simon.

Simon Development Group first assembled the site, which is made up of five separate lots, in 2007 through a joint venture with Area Property Partners. It later bought Area out of the deal for an undisclosed price, but the project stalled because of a lack of available construction financing.

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One of the investors, Geolo Capital, then took control of the property from SDG in 2011.

Geolo then set about looking for an equity partners, explained Geolo CFO Michael Mayer, arranging a deal with the firm Cube Capital. Cube recently acquired the 394-room Royal Plaza Hotel in Lake Buena Vista, Fla.

At that point, Simon decided to re-invest in the project, said Jonathan Simon, the head of Simon Development Group.

“You don’t normally hear of that happening,” Simon said, “but we stuck with it.”

Commune was not immediately available for comment.