Ian Schrager, Ed Scheetz Stepping in to Turn Around Chetrit’s Bossert Hotel
The hotel faced foreclosure last year, but is now headed for a potential repositioning and rebranding as a Public Hotel
By Cathy Cunningham February 10, 2023 12:00 pm
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The Chetrit Group may have staved off foreclosure on its landmark Brooklyn Heights hotel with the addition of two hotel moguls as business partners, Commercial Observer has learned.
Hoteliers Ian Schrager and Ed Scheetz have stepped in to potentially partner with the developer on its troubled Bossert Hotel. The new joint venture is currently in the market seeking to raise $26 million of additional equity to reposition and rebrand the property as Schrager’s Public Hotel brand, according to sources and an offering memorandum (OM) shared with CO.
The deal is in the early stages and contingent on the additional equity being raised, but Public is currently in “aggressive expansion mode,” sources said. Schrager declined to comment.
As part of the deal, Schrager and Scheetz, the former CEO of Hard Rock hotel owner Morgans Hotel Group, would become 50-50 ownership partners with Chetrit, but the hoteliers would fully take the reins when it comes to managing the hotel’s operations. Further, Chetrit’s current $80 million equity interest would be written down to $11 million, according to the OM.
The historic 282-room hotel at 98 Montague Street was built in 1909 and purchased by Chetrit and Clipper Equity’s David Bistricer for $81 million in 2012, with Chetrit buying out Bistricer in 2019.
The $112 million loan on the hotel — originally provided by CCRE but assigned to Wells Fargo in March 2020, per property records — is currently in default.
The hotel faced foreclosure starting in May 2022, after Chetrit Group defaulted on the debt — at the time owing the lender $126.7 million in total, PincusCo Media first reported. By late 2022, real estate advisory firm Hodges Ward Elliott had been retained to conduct a Uniform Commercial Code (UCC) foreclosure auction, scheduled for Dec. 12, 2022.
According to sources familiar with the situation, the UCC foreclosure was halted when Chetrit Group presented a new business plan for the property that included Schrager and Scheetz as business partners.
As such, deal parties are currently working with the loan’s special servicer, Trimont, to modify and extend the loan out for an additional two years with the intention of refinancing it further down the line when debt markets return to some semblance of normalcy, and the new, repositioned hotel has been up and running for a year.
Last March, PincusCo also reported that Chetrit was facing foreclosure on its Empire Hotel after defaulting on its $180 million loan after purchasing the property from Schrager and NorthStar Capital in 2004.
The Chetrit Group and Scheetz could not be reached for comment.
Cathy Cunningham can be reached at ccunningham@commercialobserver.com.
