It is the timing of an investment that proves decisive very often. Allen Rosenberg, a real estate developer acquired a nursing home in 2007 for $20 million. Located about 30 miles from New York City he converted the property into an oceanfront Long Island luxury hotel. It had been his dream to own one and he spared no expense to create the hotel of his dreams and named it after his late mother as Hotel Allegria. He did manage to create a 143 room boutique hotel but the process put more than $30 million on the property along with another $10 million invested by his partner Sol Green. This is where the timing went all wrong as the financial downturn forced Rosenberg and his partner to seek bankruptcy protection.
The Second Chance to Fulfill the Dream
Allen Rosenberg is amongst the lucky few who have got a second chance to fulfill his dream. His company that owned the land under the hotel has emerged from the Chapter 11 bankruptcy proceedings with its control of the land and the hotel still intact. What is more, the total debt of $38 million has also been restructured and scaled down to only $24 million. Rosenberg is very optimistic and has reworked his business strategy. The reduced debt burden has also provided him with more space to operate. The developer admitted that the last three years were hell for him as he was always dealing with lawyers, bankers, contractors, judges. He is excited about the future and is focusing on achieving his original goal. Rosenberg believes that the result of his bankruptcy proceedings was unusual because his property was also unusual for the region. You normally don’t see any resort type hotel in that location. The banks ran the risk of getting less if they pressed for foreclosure and auction. The revised mortgage was made by Brooklyn Federal Savings Bank. The developer had to shell out $2.4 million in order to prepay two years of mortgage interest payment. The bank has since been acquired by Investors Bancorp.
The Hotel Allegria Provides the Glitz to the Area
Is the timing right now? Allen Rosenberg believes it is. Long Island’s southern shore is now ready for the kind of hotel he has built. The Allegria has a rooftop pool where visitors can order $395 Cristal champagne and $150 caviar. The Island’s average room rent is $127 according to the Long Island Convention & Visitors Bureau but the Allegria rates range between $379 and $1,179 for an oceanfront suite on a Friday night. The hotel had suffered hundreds of thousands of dollars worth of damage last summer when Hurricane Irene flooded the hotel’s lobby. But the hotel has bounced back and the business is improving. The hotel has even reported 100% occupancy on some recent weekends. The revenue has been climbing when compared to corresponding figures last year. At the same time expenses have been controlled to save almost 15%. The resultant increase in income has given a healthy bottom line to the hotel. New revenue streams have been planned and a full-service spa offering massages and facials with ocean views should be up and running by early next year. An upscale boutique is also in the pipeline and will add to the overall income. Rosenberg says that he has no competition as there is no comparable hotel from Rockaway to Montauk.
Via: blogs.wsj
