Owner Quietly Selling Two ‘Illegal Hotels’ that City Wants Preserved as Permanent Housing

Royal Park Hotel at 258 W. 97th Street, between Broadway and West End Avenue.

By Joy Bergmann

For nearly two years, Hank Freid has been fighting a City lawsuit seeking a preliminary injunction against three Upper West Side properties he owns: the Royal Park Hotel at 258 West 97th Street between West End Avenue and Broadway; the Marrakech Hotel at 2688 Broadway between West 102nd and 103rd Streets; and the Broadway Hotel at 230 West 101st Street between Broadway and West End Avenue.

The City alleges that the hotels are operating illegally by serving tourists because the buildings’ Certificates of Occupancy say they should only be used as housing for permanent residents. The owner has argued that transient use of these properties is legal. We wrote a detailed backgrounder on the case here.

Last week, defense attorneys for Freid told WSR that two of the properties in dispute – the Royal Park and the Marrakech – are for sale.

Asked about the price for the Royal Park, Skadden Arps partner John L. Gardiner said, “It’s listed at 18 [million].”

“A bargain at 18,” added Ronald J. Rosenberg, a partner at Rosenberg, Calica & Birney.

The attorneys stated that Compass’ commercial division has the listing and that it was publicly posted online.

However, the seven-story 1925 building is not currently listed on Compass’ web site.

“I’m not at liberty to give any information,” says Adelaide Polsinelli, vice chair at Compass. “You have to talk to the owner.”

Hank Freid did not respond to WSR’s request for comment.

Polsinelli apparently did provide Real Estate Weekly with information on the Royal Park sale. A May 15 article there noted:

The property consists of 93 units, of which 75 units will be delivered vacant. It has an additional 24,000 s/f of development rights, presenting investors, developers and users with an opportunity to reposition the asset.

“The property is perfectly suited for dormitory, residential, corporate housing or not-for-profit users,” said Adelaide Polsinelli.

Paul Freitag, Executive Director of West Side Federation for Senior and Supportive Housing [WSFSSH], says his organization has not been approached about the Royal Park.

“We are always concerned when it appears that SROs [single room occupancy buildings] that provide affordable options may be lost through a sale and conversion to luxury housing,” Freitag said in an email to WSR. “Although WSFSSH is always looking to expand our housing and services to seniors – given the seemingly inexhaustible need – we are not, right now, looking to acquire a new building.”

Marrakech Hotel at 2688 Broadway (103rd Street)

Regarding the Marrakech Hotel, Freid’s attorneys say that transaction is being handled privately.

“The Marrakech buildings are for sale and in the process of being sold,” said Gardiner. “It’s not listed.”

“We have buyers,” added Rosenberg.

The attorneys could not comment on when that deal might close or for how much. Also unclear is the impact of a sale on the Starbucks and the A to Z 99-cent store operating on the ground floor of that property.

One other twist?

In March, we wrote about demolition permits Freid was seeking to eliminate the second through fifth floors of the Marrakech property – the floors occupied by the housing/hotel rooms at issue in the City’s lawsuit.

According to the Department of Buildings web site, that demolition plan application was approved on April 15 and is expected to cost an estimated $808,000. Actual permits to proceed with demolition have not yet been issued.

The date of those permits issuing is important to the ongoing case. During a March 11 court appearance, attorney Gardiner told New York Supreme Court Justice James d’Auguste that, “Within four weeks of permits, the [Marrakech] property will no longer operate as a transient hotel.”

For now, all three Freid properties appear to be actively seeking reservations from tourists. A June 4 check of Booking.com showed rooms available at the Marrakech Hotel, the Royal Park Hotel and the Broadway Hotel.

Broadway Hotel at 230 W. 101st Street (Broadway)

Asked about the status of the Broadway Hotel, attorney Gardiner said, “It is not presently for sale.”

City officials say these developments do not impact their efforts to win a preliminary injunction against Freid that would compel him to cease all transient hotel use of the properties.

“These buildings are only lawfully used as permanent homes, and until that changes, the City will continue to press its case against Mr. Freid’s illegal hotel operation,” said Christian Klossner, Executive Director, Office of Special Enforcement.

Note: Like 20,000+ other New Yorkers, reporter Joy Bergmann has a license as a residential real estate agent. She has no personal financial interest in any property sales discussed here or elsewhere on WSR.

NEWS, REAL ESTATE | 5 comments | permalink
    1. Rwc says:

      “Being sold privately” means transferring to his wife or children in a newly formed LLC under some other family members name .
      Same old Real estate shenanigans.

    2. Rob G. says:

      Remember the last time the city forced a landlord to stop renting to tourists? We got Freedom House instead. Be careful what you wish for.

    3. Robert says:

      I rather have these “illegal hotels” or have real seniors live in these buildings compared to the noisy homeless bum people. It’s safer to have a person from an illegal hotel than having people standing at street corners once in a while.

    4. cc says:

      He owns the buildings let him do with the what he wants – we are not a Communist gov’t YET.

    5. T says: