GFI Capital Resources Group and Spruce Capital Partners closed a $112.5 million loan to refinance Ace Hotel Brooklyn, positioning the property to capture growth in one of the nation's most supply-constrained markets.
Real estate finance firm Walker & Dunlop arranged the leasehold financing from Torchlight Investors. The loan retires existing senior debt and preferred equity, including an investment from Corten Real Estate that dates back to February 2021.
Corten confirmed it has exited its preferred equity investment as part of the refinancing.
The 287-room, full-service hotel sits at 252 Schermerhorn St. in Brooklyn. The 13-story property bridges Fort Greene, Boerum Hill and downtown Brooklyn, with subway access to Midtown Manhattan in 30 minutes.
The refinancing underscores investor confidence in New York's hospitality sector.
"New York is one of the most desirable hospitality markets in the country and is positioned for continued outsized year-over-year growth," Stan Spiegelman, GFI's chief operating officer, said in a statement. "The refinancing positions the hotel and our investors to continue capturing the exceptional growth potential we see across New York City."
GFI maintains a strong conviction in New York hospitality markets and continues to deploy capital in the sector, Spiegelman said.
New York remains the most supply-constrained hotel market in the country, driven by significant regulatory barriers, zoning amendments requiring special-use permits, and laws that restrict short-term rentals, according to Michael Brown, managing director at Walker & Dunlop.
"These factors have limited new hotel development, reduced existing supply, while tourism demand continues to surge, with more than 64 million visitors expected in 2025," Brown said in a statement.
Ace Hotel operates food and beverage concepts including Lele's Roman and Koju, a Japanese omakase restaurant. Three ground-floor retail spaces house Black Seed Bagels, gift boutique Take Me With You and record store Finer Sounds. The property includes event space, a ballroom and a fitness center.
Seibu Prince Hotels Worldwide in Japan acquired Ace Group International, parent of the Ace Hotel brand, for $90 million in September. Ace Hotel operates as a division of SPW's U.S. subsidiary while maintaining independence in brand and creative direction.
For the record
Michael Brown, along with Aaron Appel, Jonathan Schwartz, Adam Schwartz, Keith Kurland, Dustin Stolly, Sean Bastian and Cole Grims of Walker & Dunlop, arranged the transaction.