A fter a yearlong battle in bankruptcy court, a New York-based real estate firm is officially taking over as owner of the Ocean Place Resort and Spa in Long Branch.
A bankruptcy judge ruled last week that United Capital Corp (UCC), Great Neck, N.Y., would operate the oceanfront hotel.
With ownership of the hotel secured, Attillio Petrocelli, president of UCC, said on March 1 that his company is ready to make some changes to the 12-story, 254-room hotel. “It took us a couple of years to get there, but we are pleased that it finally happened,” Petrocelli said in an interview last week. “We are going to redo the whole hotel.”
According to Stephen Kronick, vice president of hotel operations, UCC acquired the hotel for $41 million.
Petrocelli said UCC plans to spend at least another $15 million on hotel improvements.
“Whether visiting for business, family vacation or a beach-front wedding, this premier oceanfront hotel is the perfect destination spot and a tremendous addition to our growing portfolio,” Petrocelli said in a press release.
“Our plans for this property include a $15 million investment in improvements and renovations that will make this the most desired oceanfront property along the Jersey Shore and will surely add jobs and revenue to the local economy.”
In February 2011 the hotel’s previous owner, Ocean Place Development, a joint venture of Orr Partners and Tiburon Capital Corp., filed notice in U.S. Bankruptcy Court just a week before a scheduled sheriff’s foreclosure sale was supposed to take place for the Ocean Place mortgage, valued at just over $58 million.
However, UCC purchased a $60 million mortgage note from Barclays Capital, the previous mortgage holder, in 2010, and challenged Ocean Place Development’s reorganization plan.
After spending over a year in court with both sides submitting reorganization plans, U.S. Bankruptcy Court Judge Michael Kaplan accepted UCC’s plan and awarded the investment group ownership.
In an interview, Petrocelli explained that a priority is to improve the hotel’s energy efficiency.
“We are going to put a new energy management system in,” Petrocelli said. “We are going to try to make it a green hotel, so there is a lot that we have to do to the hotel. “If you open a balcony door now and you keep that door open in the middle of the summer and you go out to the pool or the beach, the air conditioning is running all day,” he added. “We can make it so we close those doors electronically and have a green, energy-efficient hotel.”
The hotel is part of the hotel campus redevelopment zone, one of six redevelopment zones in the city.
Long Branch Mayor Adam Schneider said the hotel is important to the city’s redevelopment plans along the beachfront.
“They are the owners and we are going to work with them,” he said in an interview. “It is a vital spot in the city physically — it’s right in the middle of our oceanfront.
“It is a vital business in the city; it employs a lot of people and brings a lot of people into the town,” he added. “Its future prosperity is important to everybody, and what we can do to help make that happen is important to us, and we’ll do it.”
The city previously sued Ocean Place Development LLC over roughly $3 million in payments due from the conveying of various city-owned parcels on Abbottsford Avenue to the developer for the planned expansion of the site.
Schneider said last week the city expects to negotiate the issue of the $3 million with United Capital, not the previous ownership.
Original development plans called for a $500 million hotel campus project encompassing the hotel, retail space, housing, parking decks and office buildings. While the $3 million in properties remains an issue for the city, Petrocelli said it would not be an issue for UCC. “I believe eventually that will be worked out with the city somehow,” he said. “It is not our obligation to pay it.
“It was the old owner’s obligation; it has nothing to do with the property,” he added.
Schneider said the city would work on some of the issues and plans to meet with UCC officials to get on the same page. “We obviously have some issues, the Abbottsford pieces, the redevelopers agreement, which requires various things to happen on both sides,” he said. “We should sit down with them shortly. The sit-down is already in the planning stages, so we can make this work.
“It is important to us that they’re successful,” he added
Petrocelli agreed that it will be important to develop a relationship with the city, but the immediate concern is to make some improvements to the hotel.
“We realize that we will have to work with the city on the redevelopment, but that’s putting the cart before the horse,” he said. “We think our first priority is to get the building watertight.
“There are leaks in the rooms, leaks in the walls, and we have to redo the building and make it a first-class, four-star hotel and then try to work with the city on some other aspects of the hotel,” he added.
With summer rapidly approaching, Petrocelli said that most of the major work planned for the hotel would have to wait until after the season.
“We are going to try to do everything we can before the season, but we can’t disrupt our guests,” he said. “Some of it will be done now and some of it will have to be done after the season.”
With the hotel’s future secured, another of the city’s troubled redevelopment zones, BroadwayArts Center, may also be closing the books on a bankruptcy proceeding.
Schneider said the two zones being stuck in financial limbo made it difficult for the city to plan for the future.
“It is difficult, but I do bankruptcy work, so I understand what the process is,” he said. “I get a little frustrated because you know where it is going to go, so why can’t it happen tomorrow? But it doesn’t work that way.
“You look at it and you think, when it gets resolved, then we can start heading in the right direction,” he added. “On the other hand, you look at the economy and you say it’s not going anywhere anyway.”
While UCC was awarded ownership by the court, Schneider noted that the City Council still acts as the redevelopment authority and would have to vote on the transfer of ownership.
He explained that because of the court decision and because United Capital is financially solvent, the council really doesn’t have a choice but to approve the transfer of ownership.
“I would think they would still have to approve it because of the change in ownership, but I don’t think the council could deny it, either,” Schneider said. “While they may or may not be developers, they are going to be in the business of running the hotel, and combined with the times, we have no basis to say no.
“That would lead to a lawsuit … and not a winning one.”
In 2007 the city approved a $500 million expansion and renovation project at the hotel, but Schneider said the original plan would likely be amended.
CityAssessor John Butow previously said that the hotel itself is assessed at just under $55.4 million, and there is currently no tax abatement on the property, with the hotel paying over $1 million a year in city taxes.
While city and hotel officials plan to meet in the future, Petrocelli said he expects the hotel to benefit the community in the coming years.
“We are just excited about getting the hotel, we are excited about fixing it,” he said. “We think it is going to be great for the community, great for us and great for our guests.”
According to its website, United Capital Corp.’s real estate holdings encompass more than 150 properties including hotels, department stores, shopping centers, restaurants, office buildings and other properties. It operates six full-service hotels in Connecticut, Florida, Georgia, New Hampshire, New Jersey and New York.