City Club's owners, led by hoteliers Stephen Brighenti, Jeffrey Klein and Russell Hernandez, intend to use up to $13 million of the financing that closed recently to construct 66 rooms atop the 65 already in place at 55 W. 44th St. The expansion comes amid a hotel development boom in the city, with 4,700 units slated to be added between 2011 and 2013, according to Eastern Consolidated.
"Out best-case scenario is that in six to eight months we'll have [city] approval to proceed," Mr. Brighenti said in an interview. "Whereas the original rooms are more traditional, these will be more open and loft-like. Half of the new rooms will have balcony terraces."
Mr. Brighenti's group opened the independent City Club Hotel in 2001 after renovating a nine-story, historic building to house it. At the time, the developers installed steel infrastructure capable of supporting an additional nine floors.
Since then, the hotel survived the industry's historic downturn and rebounded to post occupancy of 94% last year. It has become known partly as the site of chef Daniel Boulud's popular db Bistro Moderne. And its average nightly rate is nearly $300, Mr. Brighenti said.
But the City Club faced a challenge this month as the payment deadline loomed for its $22 million mortgage, held by Credit Suisse AG's Column Financial Inc. The hotel's owners turned to Starwood Property Trust, which is managed by an affiliate of hotel and real estate investor Barry Sternlicht's Starwood Capital.
Starwood agreed to loan the hotel's owner, City Club Hotel LLC, $23 million to pay off the Column mortgage as well as a construction loan of up to $13 million to finance the hotel's expansion. The loans carry a four-year term with a one-year option. Brokerage Cushman & Wakefield Sonnenblick Goldman arranged the loan for City Club Hotel LLC.
"Functionally, it's a bridge loan with a construction loan attached, and it had to close within 30 days," Starwood Property Trust President Boyd Fellows said. "That's the center of the bull's eye for us. It's a difficult but smart transaction that played to our strengths because we're flexible and can move fast."
Mr. Brighenti and his partners intend for new floors of the hotel to feature a floor-to-ceiling wall of windows that gradually slopes away from the street as it ascends. The partners have a lengthy history in Manhattan's hotel scene, having developed some of the city's first boutique hotels as Gotham Hospitality Group in the early 1990s.
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