Is Hotel Chelsea Revamp Becoming a Money Pit?

The redevelopment of the iconic Hotel Chelsea may be becoming more trouble than it's worth. In addition to being over budget and at least a year behind schedule, the owners can't seem to agree on how much to spend on upgrades and how to position the hotel. After sinking $185M into it, they're left with million-dollar renovation costs and interest payments each month. So they've hired Eastdil Secured to refinance their debt, borrow more money and bring in another partner, the Wall Street Journal reports. Adding to the complications is a tightrope act with rent stabilized tenants who are resisting the push to modernize. The hotel was initially owned by families who occasionally made exceptions like letting tenants pay rent in installments or accepting an art work in place of money. When Joseph Chetrit bought the property in 2011, he immediately clashed with the tenants who worried that he was trying to push them out. The current owners have made an agreement with tenants, creating arrangements for them to move to another apartment or putting them up in a quality hotel during renovations; but the process is still slowed because they can't shut down entire floors for work. But while things may be crawling at a snail's pace, keeping the tenants happy is important, because they'll support the cause, says Chelsea Hotels CEO Edward Scheetz. The hotel has been closed since 2011 and isn't expected to open before 2017. [WSJ]

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