Meridian Capital Obtains $85M in Financing for Hotel Chelsea
- Aug 05, 2011
The Hotel Chelsea gets a new owner and a new plan for a makeover with an $85 million financing package orchestrated by Meridian Capital Group L.L.C. on behalf of the Chetrit Group and Clipper Equities. The new owners acquired the iconic 225-room hotel from a group of families.
Meridian was able to secure a 36-month balance-sheet loan from Natixis for Chetrit and Clipper. The financing comes with a LIBOR-based rate and an option of a 12-month extension.
“By leveraging our strong lending relationships, Meridian was able to secure acquisition and construction financing from a balance sheet lender for this iconic asset, allowing for the development team to make significant improvements to the property and execute its business plan,” Ronnie Levine, a managing director with Meridian, noted in a prepared statement.
Carrying the address of 222 W. 23rd St., the Hotel Chelsea has a long history as a birthplace of celebrated ideas and offerings churned out by famed artists in the literary and music industries. The list of renowned hotel guests and long-term residents includes playwright Eugene O’Neill; novelist Thomas Wolfe; science fiction writer Arthur C. Clarke; and musicians Jimi Hendrix, Janis Joplin and Bob Dylan, who penned songs within the walls of the 12-story tower.
Chetrit and Clipper plan to restore the storied 175,900-square-foot property, which first opened its doors as an apartment co-op in 1884, and reposition it as a leading boutique hotel, a goal the value-add commercial real estate investment team has achieved successfully in Manhattan in the past. The team brought new life to The Empire Hotel after Chetrit acquired it from Ian Schrager Hotels and NorthStar Capital for $80 million in late 2003.
Both the volume and size of hotel financing transactions Meridian arranges have grown substantially during the past six months. “Driving this increase in financing demand is augmented investor demand for hospitality assets in global business hubs and 24-hour gateway cities, of which New York is at the top of the list,” Levine told CPE. “Over the past 18 months, New York has seen numerous construction starts on ground-up hospitality projects, as well as conversions, recapitalizations and as part of mixed-use developments, all to keep up with investor appetite.”
Currently, Meridian is advising on hospitality-related transactions totaling near $500 million. “We are planning for a very busy second half of 2011.”