Allegria Hotel: Back on top and out of the red Five Towner Allen Rosenberg focuses on the future

“This project is breaking the first rule in Real Estate 101: Don’t fall in love with the bricks,” said Allegria Hotel owner Allen Rosenberg, 49, sitting at a table in the hotel’s lounge overlooking the rooftop pool — the only one of its kind on Long Island — as guests and servers roamed about. “[The hotel] became a labor of love.”

Rosenberg’s development company, Alrose King David LLC, which owns the hotel, filed for Chapter 11 protection in July 2011, claiming between $10 million and $50 million in liabilities to more than 50 creditors, but a year later, Rosenberg, dressed in tan linen pants and a light-colored dress shirt, seemed relaxed, and he had good reason to be. On June 18, U.S. Bankruptcy Court Judge Dorothy Eisenberg gave final approval to a reorganization plan allowing Alrose King David to emerge from bankruptcy and pay off or restructure its debts.

“We’re very excited that we were able to navigate through one of the toughest recessions in U.S. history,” Rosenberg said. “It allows me to retain control of the hotel … The judge recognized that I was the right operator and had the right team in place.”

The 143-room, nine-story Allegria, where guest rooms run from $300 to more than $1,000 a night, has had its shares of highs and lows since it opened in 2009. In 2007, Rosenberg, who owns the Manhattan-based Alrose Group, purchased the former King David senior-citizen home property for $21 million to build a boutique-style, oceanfront luxury hotel and spa with an upscale restaurant and other amenities.

“There was a niche to fill … it was just so obvious that this has to be a hit, especially with the Long Island Rail Road four blocks away, and Long Beach being such a colorful, diverse community,” Rosenberg said. “This is definitely the platform for a year-round facility such as the Allegria, which can really offer four- or five-star accommodations and catering.”

For years, a number of developers had proposed hotel projects that never got off the ground. The King David, which closed two years before Rosenberg bought the property, was already zoned for hotel use.

Rosenberg, a native of Mill Basin, Brooklyn, who lives in the Five Towns, said that of all the properties he owns, the Allegria became a project close to his heart. He named the hotel after his late mother. The Solomon Schechter attendee, and Baruch College graduate additionally honored the memory of his late father, a Polish born Holocaust survivor, at the hotel’s rooftop venue, “Jack on the Rocks.”

“There have always been developers that have come to this area to build a hotel, and they never did it,” he said. “I was for real — I put the money in and opened up the place. I knew that once we took off, there was no going back.”

A labor of love

Things didn’t exactly go smoothly, Rosenberg acknowledged. After the economy tanked in 2008, he said, construction of the hotel went over-budget by approximately $25 million, and construction delays resulted in a late opening in the fall of 2009.

“It was a big undertaking,” said Michael Kerr, president of the Long Beach Chamber of Commerce, adding that he believes the hotel has become an important part of the community, bringing in visitors and benefiting local businesses. “… [Rosenberg] is trying his best, and hopefully he’ll have a busy summer and be able to do well.”

“I was of the opinion, build it and they would come,” said former City Councilman Denis Kelly. “… [I]t’s just that they started to do it during the worst recession in years.”

Efforts to build a spa fell through, and parking proved problematic as well. The hotel was given a temporary certificate of occupancy when it failed to meet all of the city’s off-street parking requirements, but Rosenberg said that Judge Eisenberg’s ruling would help him resolve those issues, though he declined to discuss specifics.

Although the hotel received mostly positive reviews and business began to pick up in 2010, the property had racked up a number of liens from contractors who sued for money they claim they are owed. Additionally, Alrose owed both the City of Long Beach and Nassau County approximately $375,000 in back taxes.

In 2010, after Alrose defaulted on a loan, Brooklyn Federal Savings Bank, which held the $38 million note on the property, began marketing the debt and threatened to foreclose. Rosenberg stood to lose the hotel and millions of dollars of his investment. He ultimately filed for Chapter 11, but stressed that the move had nothing to do with the hotel’s operations.

“It would have killed me to see somebody take over this property after I put my heart and soul into it,” he said. “When you’re creating a new business in a brand new market, these things happen. But you can’t focus on the negativity. I had to keep my eye on the overall goal, which was to build the most successful and elegant hotel on Long Island. The formula was always correct, but there were growing pains.”

Out of the red

Rosenberg said that Eisenberg’s confirmation of the reorganization plan means that he can continue to focus on making the Allegria hotel an “icon” on Long Island. Court documents show that the principal value of the debt was cut from $38.2 to $24 million and list the property’s estimated market value at $22 million. The agreement also allows Rosenberg to pay any back taxes owed — officials said that he has already paid back the city — and pay a percentage of what Alrose owed to creditors.

“The contractor liens, they end up going way,” said Louis Scarcella, an attorney with Farrell Fritz P.C., the firm that is handling the case for Rosenberg. “The tax debt has been paid, and reducing the bank debt down to $24 million makes it far more manageable.”

Scarcella said that Rosenberg held roughly $4 million of his own money in escrow to help him pay back some debts.

“Having a successful boutique hotel is an extremely important part of having a vibrant, dynamic downtown,” said City Manager Jack Schnirman, “and that’s why we are so pleased to see the Allegria moving forward in a positive direction financially.”

Rosenberg said that the hotel is finally starting to turn a profit, and that his new management team has been focusing more on attracting corporate clients, especially airlines. General Manager Mike Witte said that despite rumors that the hotel is “dead” in the offseason, the Allegria has survived three winters by hosting events and with a strong catering and restaurant business, which have driven room sales. Additionally, the Allegria welcomes all kosher caterers. With advance notice hotel guests can also have kosher food delivered to their rooms.

According to Witte, the hotel attracts an average of 60,000 patrons per year, including hotel and banquet guests and restaurant and bar patrons. This past winter, he said, its occupancy rate was over 60 percent, a significant improvement over previous years.

“We’re a year-round hotel,” Witte said. “We are trying different things to attract not only the local community, but people in the tri-state area. We’re confident that the plan we have in place with Allen is the right direction.”

The Atlantica restaurant, and hotel amenities that range from massage suites to surfing lessons, have also been a boost. Witte said that the Jack’s on the Rocks rooftop bar and lounge, which opened last year and boasts stunning ocean views, has become popular as well and will soon be offering brunch. The rooftop pool and deck is now open to the public Monday through Thursday, and the hotel recently launched a series of salsa, reggae and disco-themed nights.

And now that the property is out of the red, the hotel’s eighth-floor spa is finally slated to open next year, Rosenberg said.

“All of the growing pains are behind us,” he said, “and the vision is to become the crown jewel of Long Island.”