Phila. developer aiming to buy blighted landmark Divine Lorraine

The Divine Lorraine Hotel, now vacant and derelict, was one of the city's first "skyscrapers" when it opened in 1894. Sources say the aim is to create housing and commercial space there.
The Divine Lorraine Hotel, now vacant and derelict, was one of the city's first "skyscrapers" when it opened in 1894. Sources say the aim is to create housing and commercial space there. (MICHAEL S. WIRTZ / Staff)
Posted: August 11, 2012

Developer Eric Blumenfeld is attempting to buy the derelict Divine Lorraine Hotel either directly from the current owners or at sheriff's sale in the fall, sources familiar with the negotiations say.

Blumenfeld, who has been credited with sparking a revival along North Broad Street, has had crews in the building to examine its condition since late July. If negotiations with the owners fail, sources said, Blumenfeld will work with the city and the bank that holds the debt on the Broad Street landmark to acquire it at a sheriff's sale in October.

Blumenfeld could not be reached for comment. But according to individuals familiar with the situation, the city, which is owed $838,129.60 in real estate taxes, could request that the property be put up for a sheriff's sale.

Amalgamated Bank, a New York-based bank that is owed more than $10 million, also could force a sale.

"There is a plan for an organized process to get the property in the hands of someone who will redevelop it," said one of the sources.

That plan would include converting the hotel into market-rate housing and a sizable amount of commercial space. The source said it is most likely that the project would include federal historic tax credits as part of its financing package.

The current owners include local builder Michael Treacy Jr.; a Dutch company, Sunergy Housing; and Michigan-based NSI Real Estate Group. In 2006, they bought the hotel and 3.7 vacant acres for $10.1 million. The economic downturn derailed their plans to restore the hotel and build new housing for a total of 900 units.

The current negotiations would involve a sale of only the hotel, with the land being "the subject of a separate transaction," the source said.

Earlier in the year, Blumenfeld floated the idea of using the land to build a campus for several public schools, a concept some observers have dismissed as unlikely given the Philadelphia School District's dire financial state.

Redeveloping the graffiti-laden building has been a priority of Mayor Nutter. For more than a year, his administration has been pressuring the bank and current owners to do something with the deteriorating structure.

Vandals have stripped the interior, broken windows, and covered the roof and walls with graffiti. Deputy Mayor Alan Greenberger has described the hulking structure at 699 N. Broad St. as "a billboard of blight."

After a fire March 6, the Department of Licenses and Inspections sealed the building's lower floors to prevent vandals from getting inside.

Opened in 1894, the 10-story Lorraine apartment building, which quickly became a hotel, was one of the city's first "skyscrapers." In 1948, the preacher Father Divine turned it into the headquarters of his International Peace Mission.

If Blumenfeld succeeds in buying the Divine Lorraine, it would mark the second time he has owned the 10-story property.

He acquired the hotel and adjacent land for $5.8 million in 2003 and sold it three years later to the current owners for nearly twice the price.

On North Broad Street, Blumenfeld, who founded EB Realty, has restored the old Botany "500" factory and Biberman Building into loft apartments.

In an interview last month, Blumenfeld called the development of North Broad his "passion" and predicted he would overcome whatever obstacles he might face. "I expect to do the next project, and next after that, and do it well."


Contact Jennifer Lin at 215-854-5659 or jlin@phillynews.com, or follow on Twitter @j_linq.

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