Ian Schrager and Ed Scheetz are throwing a lifeline to the Chetrit Group’s distressed Brooklyn Heights hotel.
The hoteliers have stepped in to possibly partner with the real estate development firm to rescue its landmark Bossert Hotel at 98 Montague Street from foreclosure, Commercial Observer reported.
The joint venture is looking to raise $26 million to reposition and rebrand the property as Schrager’s Public Hotel, according to unnamed sources and an offering memorandum reported by the outlet. The deal is in the early stages and dependent upon more money being raised.
Schrager and Scheetz would split ownership with Chetrit, but the hoteliers would be responsible for managing the 282-key hotel, according to the agreement. Chetrit’s $80 million equity interest would be reduced to $11 million.
Schrager, Scheetz and Chetrit are working with Trimont, the special servicer, to modify and extend the hotel’s defaulted $112 million loan for two more years with the hope of refinancing at when capital is more readily available and the repositioned hotel is operational. The loan was originally provided by CCRE in 2019 before it was assigned to Wells Fargo in 2020.
The hotel was reported to be facing foreclosure last May, after the lender claimed Chetrit owed more than $126 million at the time. A UCC foreclosure action was initiated in December, but the process was put on hold after Chetrit presented a plan that included bringing on Schrager and Scheetz as partners.
Chetrit and Clipper Equity’s David Bistricer paid $81 million for the hotel in 2012 before Chetrit bought out Bistricer in 2019.
News of Schrager and Scheetz’s involvement comes as the hoteliers acquired the former Standard Hollywood hotel in West Hollywood earlier this month and have embarked on an expansion of Schrager’s Public Hotels brand.
“This will be the first of many new Public hotels to come,” Schrager told The Real Deal.
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Chetrit’s Empire Hotel at 44 West 63rd Street on the Upper West Side was able to stave off foreclosure last summer. After falling behind on payments, the developer, along with partners the Podolsky brothers, negotiated a modification on the property’s $170 million mortgage. The owners got a two-year extension on the loan for the 427-key hotel and reduced the interest rate.
Maverick Real Estate Partners sued Chetrit last month over an unfinished 323-key hotel at 255 West 34th Street in Midtown, accusing the developer of defaulting on its debt payments for the project. Maverick has asked Chetrit to finish the hotel or hand over the $106 million that the firm claims is needed to complete the project.
— Pat Ralph