Developer Louis R. Cappelli has a Florida-based buyer ready to pay $21 million for his Residence Inn by Marriott in downtown New Rochelle.
The president of Valhalla-based Cappelli Enterprises Inc. said Chatham Lodging Trust, a real estate investment trust in Palm Beach, has signed a purchase contract for the 124-suite, extended-stay hotel at 35 LeCount Place. The 10-story, 10-year-old hotel abuts the New Roc City entertainment and retail complex developed and formerly managed by Cappelli”™s company.
The $21 million price in the all-cash transaction amounts to approximately $169,000 per suite.
A new player in the hotel real estate market, Chatham Lodging Trust focuses its investments on upscale extended-stay hotels and select-service hotels with premium brands in the nation”™s 25 largest metropolitan markets. The company in its first New York venture recently paid $21.3 million, or approximately $172,000 per suite, for the Residence Inn by Marriott in Holtsville, Long Island. The REIT also owns six Homewood Suites by Hilton hotels around the country and a Hampton Inn & Suites property in Houston, Texas.
The New Rochelle hotel is the 12th that Chatham has acquired or contracted to buy since its initial public offering in April, when it raised $160.4 million. Company officials in a press release said the hotel will be managed by Island Hospitality Management, a company in which Jeffrey H. Fisher, Chatham”™s board chairman, president and CEO, owns a 90-percent share.
Cappelli in a prepared statement said the real estate industry continues to have limited access to traditional banking funds for development projects. He said his company will look to partnerships and relationships with alternate capital market sources such as Chatham Lodging Trust to secure financing for LeCount Square, the approximately 1.1-million-square-foot mixed-use development proposed for a one-square-block site opposite New Roc City. The project has been stalled by lack of financing in the credit crisis and recession and by Cappelli”™s inability to reach a deal with the U.S. Postal Service on a downtown post office property needed for the project.
“There are REITS and hedge funds that have strong interest in investing in emerging urban centers, and downtown New Rochelle is a perfect example,” Cappelli said. He said those financing sources will be “critical” to developing LeCount Square.
A Cappelli-controlled company last spring was forced out as manager of the New Roc City entertainment and retail complex by the developer”™s former partner, Entertainment Properties Trust, a REIT based in Kansas City, Mo.
The disputing partners”™ legal battles, waged in federal and state courts in Kansas and New York, ended in June with an out-of-court settlement in which Cappelli gave up his interest in the New Rochelle center, where he and his partners clashed over Cappelli”™s push to convert the sprawling entertainment venue into a shopping center anchored by department stores. In exchange, Cappelli acquired sole ownership of City Center in downtown White Plains, whose approximately $113 million mortgage debt and vacant retail space EPT wanted to be rid of.
EPT, which held 70 percent ownership at New Roc City and at City Center, paid $3.7 million in cash and assumed liabilities in the property exchange. Cappelli retained ownership of the Marriott hotel and The Lofts at New Roc, a luxury residential complex.
