Lender Buys D.C.'s Line Hotel At Auction

The popular Line DC Hotel sold at auction Thursday to the property's lender.

The lender, Acore Capital, had brought it up for auction and submitted a $1M credit bid, meaning it also includes the value of the $86M loan it holds, and another bidder would have to surpass that figure.

Acore's representative, Patrick Robson of law firm Hunton Andrews Kurth, submitted the opening bid, and no other bids were made. Acore and Robson didn't respond to requests for comment before publication. 

The lender winning with its credit bid was a surprisingly conventional ending to an auction that had been highly anticipated.

On Friday, Eater DC reported that Elon Musk was planning to bid on the hotel with plans to turn it into a "private social club." That report sparked a petition to stop Musk from buying the hotel, which gained more than 1,900 signatures. 

Friedman Capital's Brian Friedman, one of the original developers behind the hotel, had also told Bisnow last month he was working with a new partnership to participate in the auction. Friedman declined to comment after the auction Thursday. 

The hotel's food and beverage offerings are in a 110-year-old former church with 60-foot vaulted ceilings, and its 220 guest rooms are in a new building next door. It sits in D.C.'s Adams Morgan neighborhood at 1770 Euclid St. NW.

The development team behind the hotel was Sydell Group, Foxhall Partners, Friedman Capital and Square Mile Capital, which later became part of Affinius Capital. The team obtained an $80M loan in 2016 from Deutsche Bank and refinanced it in 2019 with an $86M loan from Acore Capital. 

Acore Capital took control of the property in May and retained JLL to market it for auction, Bisnow first reported last month. 

JLL reached out to more than 8,000 potential purchasers and had 23 calls with prospective bidders, one of its brokers said at the start of the auction. 

The auction took place in front of a New York City courthouse at 60 Centre St. in sub-30-degree weather, though only a handful of people showed up in person as it was simultaneously conducted on a videoconferencing platform. Most of those in person put headphones in and dialed into the video call.

In total, the underwhelming auction lasted approximately 10 minutes before the group quickly scattered to find warmth.

The Line DC Hotel project had been in the works for more than a decade before opening, with Friedman winning the rights in 2004 to develop the former Church of Christ, Scientist building. 

It opened in 2017 and quickly became a popular spot for young professionals, with its restaurants from famous chefs Erik Bruner-Yang and Spike Gjerde generating buzz in the city's foodie scene. It earned a place on Bon Appetit's 2018 list of the 50 best new U.S. restaurants, and Forbes that year called it D.C.'s "hippest" hotel. 

Those restaurants closed in 2020 and 2021 after the pandemic upended the hotel's operations. Its food and beverage space now features No Goodbyes, a restaurant, bar and café. 

Friedman told Bisnow last month the property had increased revenues in 2018 and 2019 and was on pace to continue that growth in 2020 before the pandemic, to which he attributes the property's financial distress. 

"Covid shut it down for two years, and now it’s reopened, but it doesn’t have four restaurants anymore," he said. "It doesn’t have the same revenues it had before."