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Increasing Property ROI through Complete REAP Mediation
Property Name: St. Moritz Hotel
Address: Hollywood, California
Square Footage: 21,936
Number of Units: 80 Units (78 residential, 2 retail)
Contract Value: $750,000
Situation Overview:
St. Moritz Hotel, a residential property located on Sunset Blvd. in Hollywood, CA, suffered from more than 20 years of deferred maintenance and high crime activity. Due to inadequate plumbing, collapsed electrical systems and substandard rooms that were not up to code, the Los Angeles Housing Department placed the hotel into REAP (Rent Escrow Account Program), garnished 50 percent of all rental income and threatened receivership.
Strategy & Execution:
In September 2006, after evaluating the infrastructure of the hotel, Healstone Construction Development advised a complete modernization of the plumbing and electrical systems. In addition, old flooring was replaced, walls and ceilings were renewed, the heating system was replaced and bathrooms were renovated. As representative for the St. Moritz Hotel, Healstone established vital communications with various City and County agencies essential to the project’s success.
Because the hotel was 70 percent occupied by long-term residents during the time of construction, special procedures and protocols were established to minimize inconveniences to the hotel residents. Healstone Property Management was brought on board to take over the day-to-day operations of the hotel, staffing maid and maintenance crews, enforcing hotel rules and adding new security measures, including video cameras and gates, and creating new protocols and procedures for guest check-in.
Results:
Healstone successfully released the REAP placed on the St. Moritz Hotel and restored the owner’s income to 100 percent. The upgrades and aesthetic improvements ultimately allowed the owner to increase rents and maintain higher occupancy rates. This opportunity showcased Healstone Construction Development’s ability to refurbish an antiquated hotel in jeopardy of receivership by effectively communicating with City and County agencies and executing full-service efforts within a strict compliance timeline.
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