The Real Deal New York

Reboot for Hotel Chelsea

A new owner checks in at the pricey, long-running renovation project
By Marynia Kruk | December 01, 2016 01:00PM
Hotel Chelsea

Hotel Chelsea

In October, one of New York’s savviest boutique hoteliers, BD Hotels TRData LogoTINY, did something that has cost a succession of its well-heeled predecessors dearly. It bought the Hotel Chelsea, the scruffy New York City landmark at 222 West 23rd Street with an illustrious artistic pedigree. BD Hotels, which takes over the property from the partnership group of investor Bill Ackman, Leucadia National Corp. chairman Joseph Steinberg and real estate investment firm Wheelock Street Capital, aims to manage it as an upscale hotel to open in 2018 with over 120 rooms and some condos to follow. “This is [about] restoring a great iconic property,” company co-head Richard Born told The Real Deal.

Good luck with that. Ongoing renovation work has already soaked up over $130 million, yet much remains undone. The hotel’s last guest checked out in 2011. The Chetrit Group snapped up the place five years ago, only to sell it off in 2013 after renovation work collided with stiff tenant opposition. Meanwhile, 51 rent-stabilized tenants remain.  To its credit, BD Hotels, whose principals acquired the property with frequent collaborator Sean MacPherson, has successfully mined other aging Manhattan hostelries. With MacPherson, the company has redeveloped the Marlton, while its single-ownership portfolio includes the Bowery, the Mercer and the Ludlow. The Chelsea Hotel’s new ownership entity, SIR Chelsea LLC, is an acronym for the new owners’ first names: Sean MacPherson, Ira Drukier and Richard Born.

167,063

The square footage of the Hotel Chelsea, which is to be reborn with hotel rooms and a small retail component taking up 114,057 square feet. The remaining 53,006 square feet will be residential condominiums and rental units for existing tenants.

bob-dylan24

Bob Dylan’s age when he lived at the Chelsea Hotel in 1965 and wrote “Visions of Johanna,” which appeared on his album “Blonde on Blonde.” Other artists who checked in include Robert Altman, William S. Burroughs, Arthur Miller, Robert Mapplethorpe, Leonard Cohen and Sid Vicious, whose girlfriend died of a stab wound there.

34

The number of Chelsea Hotel residents who sued the Chetrit Group in 2011, claiming that renovations had created dangerous conditions for tenants. In response, Chetrit applied to evict 10 tenants who didn’t live in rent-stabilized units. While tenant relations have improved, the DOB in October issued a partial work-stop order at the building due to an inadequate tenant-protection plan.

by-the-numbers-frame22

The number of paintings by former tenant and nightlife impresario Arthur Weinstein that were reclaimed by his widow from the hotel’s prior owner, Joseph Chetrit. The works were worth as much as $500,000 and had been accepted as payment in lieu of rent over the years.

2011

The year hotel operations ceased after a 106-year run. The hostelry that bills itself as the oldest continuously operating one in New York City is the SoHotel at Broome Street and the Bowery. It opened in 1805 as the Westchester Hotel and has taken on a dozen different names and owners since then.

Charles-Fourier21

The number of years following its 1883 opening during which the property operated as a commune based on the theories of French utopian philosopher Charles Fourier. Originally, the hotel housed artists and writers alongside electricians, bricklayers and plumbers who had worked on the building. The co-op went bust in 1905, and the property was converted to a hotel that quickly attracted guests of an artistic ilk.

20%

The rent reduction for tenants until renovations are complete, as per a deal between tenants and the landlord in 2013. Tenants also got a five-month rent abatement, exemption from rent increases tied to capital improvements and a payment of $100,000 in legal fees.

$250M

The price paid for the property in 2016, over three times the $78.5M paid by the Chetrit Group, which bought the property five years earlier. Previously, the property had been in the same hands since the 1940s, when three partners bought it for about $50,000.

 Correction: A prior version of this article incorrectly stated that the Greenwich Hotel is a single-ownership entity; Raphael De Niro and Robert De Niro are 50 percent stakeholders with Ira Drukier and Richard Born.