Chetrits, King & Grove break up hotel partnership
Hotel Chelsea deal is just one facet of end of business relationship
The split between the Chetrit Group, one of New York City’s most powerful real estate families, and boutique hotel brand King & Grove goes much deeper than a deal to transfer the Hotel Chelsea, The Real Deal has learned.
Ed Scheetz, the founder of King & Grove, has reached an agreement with brothers Joseph and Meyer Chetrit to split up their boutique hotel portfolio, following a prolonged internal dispute over the management of the Hotel Chelsea, in which the hotel brand was a minority owner.
Scheetz, the former CEO of Morgans Hotel Group, will take full control over managing the King & Grove brand, which includes Ruschmeyers in Montauk; King & Grove New York, King & Grove Lafayette and Hotel Chelsea in Manhattan; and King & Grove Williamsburg in Brooklyn, he said in a statement provided to The Real Deal. Scheetz has also agreed to manage the Tides in Miami on a transitional basis, on behalf of the Chetrit Group.
The Chetrit Group will keep the remaining hotel development properties, and will continue its existing commercial real estate business. Meyer and Joseph Chetrit were overseas and could not immediately be reached for comment, according to a company official.
The identity of Scheetz’s new investment partners is not yet clear, and it remains to be seen whether the Chetrit Group will partner with a new hotel operator to develop the remaining properties. Additional details on the future of the hotel group will be forthcoming in the next few weeks, Scheetz said.
For Scheetz, the move is unexpected, as he’d intended to use the partnership to expand the King & Grove brand, which had 14 sites either operating or under development, and had planned more than 3,000 rooms over the next three years.
However, Scheetz and the Chetrits had been battling behind the scenes over the operation of the Hotel Chelsea — still the home of rent-stabilized tenants — which the Chetrit Group acquired for $79 million in 2011. The company’s plans to convert the property into a King & Grove hotel met with numerous public relations snafus and construction hurdles, including a stop work order the Department of Buildings issued in May after a construction incident knocked out the building’s heat, hot water and cooking gas.
Scheetz informed the tenants that his firm acquired 100 percent of the equity after buying out the site from the Chetrit Group and David Bistricer’s Clipper Equity.
“We now own 100 percent of the hotel and we intend to make a number of significant enhancements to the way the property is managed and the manner in which the restoration is conducted,” said Scheetz in the memo to tenants.