The Divine Lorraine Hotel on North Broad Street has a new owner: developer Eric Blumenfeld

"I can't believe it worked," Eric Blumenfeld said after gaining title to the Divine Lorraine Hotel. "This was big."
"I can't believe it worked," Eric Blumenfeld said after gaining title to the Divine Lorraine Hotel. "This was big." (MICHAEL S. WIRTZ / Staff Photographer)
Posted: October 04, 2012

For the second time in eight years, Eric Blumenfeld owns the storied Divine Lorraine Hotel at 699 N. Broad St. and hopes to convert it into rental apartments by next year.

Blumenfeld, already an active developer along the North Broad Street corridor between City Hall and Temple University, gained title to the property at Tuesday's sheriff's sale.

He was the sole bidder for the 11-story building, a hulking, graffiti-scarred landmark that has become a focus of Mayor Nutter's economic development efforts.

The mayor has said a revival of the Divine Lorraine is key to turning around North Broad Street.

"Without the Divine Lorraine being redeveloped, everything around it looks blighted even if it isn't," said Alan Greenberger, deputy mayor for economic development.

Blumenfeld gained control of the building in a two-step process. On Monday, he bought for an undisclosed price an outstanding note on the property from the New York-based Amalgamated Bank.

On Tuesday, he gained title to the property at the auction, agreeing to pay off all liens and city taxes. The value of both the mortgage and liens is $8,054,104.39.

"I can't believe it worked," Blumenfeld said after the auction. "This was big."

Blumenfeld said he would immediately try to finalize design plans, permits and financing for the renovation project.

He wants to convert the building into 126 rental apartments, including 25 units that would lease for subsidized, affordable rates to lower-income tenants. The ground floor would be used for restaurants or food outlets.

Blumenfeld said he was in discussions with restaurateur Marc Vetri and Iron Chef Jose Garces about taking space in the building.

The project is to cost about $43.5 million. Blumenfeld said he already had secured more than half that amount from U.S. Bank and will seek tax-credit financing and a state grant for the rest.

Now that he holds title to the property, "that opens the door for conversations," he said. "No one would take me seriously until we had the title."

If all goes as planned, he said he could foresee beginning work in early 2013.

"We hope that 30 days from now, all the pieces will come together," he said.

The 118-year-old Divine Lorraine opened as the city's first high-rise luxury apartment building. In 1948, the Rev. Major Jealous Divine, a self-styled religious leader, made it the home base for his followers, who lived, dined and worshipped in the building.

Blumenfeld bought the building and an adjoining four-acre lot in 2003 for $5.8 million. But, distracted by another project, he sold the property three years later to a group including local builder Michael Treacy Jr.

The Treacy group had ambitious plans to build a mix of retail and residential units but got derailed by the economic downturn. Unable to pay its mortgage and owing more than $800,000 in taxes, the group was forced to relinquish control.

Blumenfeld was among a handful of developers that the city encouraged to take on the project. "The whole goal was to get ownership into the hands of someone willing and able to redevelop this thing," Greenberger said.

Blumenfeld converted 640 N. Broad St. into loft apartments and joined with another developer to redevelop 600 N. Broad and the former Wilkie Buick dealership.

Now that he has control of the Divine Lorraine, Blumenfeld would also like to acquire the vacant land next to it to develop into a campus for public high schools. He has floated the concept with some parent groups but does not have a commitment from the Philadelphia School District.


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

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