The Line's Developer Says He Plans To Bid On Hotel At Auction With New Partners
Brian Friedman is trying to hold The Line.
Friedman won the rights to redevelop the historic church at 1770 Euclid St. NW in Adams Morgan and led a partnership that turned it into a popular destination called The Line DC Hotel.
Now, the property has been put up for auction by its lender, Bisnow first reported Wednesday. Acore Capital retained JLL to market it for sale, and a public sale is scheduled for Jan. 23 in front of a New York City courthouse.
On Friday, the Friedman Capital founder told Bisnow he has heard from several companies in recent days about bringing him into a partnership to bid on the asset.
"I’ve been asked by institutional capital, family offices, hotel companies — management companies and brands — that are interested in getting their brand in there to take the lead and participate on going to the auction," he said. "Because of that, I will participate with them as their operating partner."
He said those parties include a New York family office that he has partnered with previously, along with Choice Hotels and other hotel management companies. He said he has registered for the auction.
Friedman's partners in the hotel's ownership group were Sydell Group, Foxhall Partners and Square Mile Capital, which later became part of Affinius Capital.
Friedman has been involved with The Line DC for two decades. He won the rights in 2004 to develop the former First Church of Christ, Scientist property. The project was initially planned as a residential conversion before he pivoted to the hotel, and it faced a series of hurdles before ultimately opening in 2017 — a process that won Friedman the Washington Business Journal's Perseverence Award in 2018.
The hotel opened with restaurants from famous chefs Spike Gjerde and Erik Bruner-Yang, which generated media attention and drew activity to the property. Its revenues increased year-over-year in 2018 and 2019 and was on pace to continue that trend in 2020 when the pandemic struck, Friedman told Bisnow.
He attributed the property's financial distress to the impact of the pandemic. Gjerde and Bruner-Yang's restaurants closed permanently, and the property's revenues took a major hit and have yet to fully recover.
"Covid shut it down for two years, and now it’s reopened, but it doesn’t have four restaurants anymore," he said. "It doesn’t have the same revenues it had before."
Friedman also said Adams Morgan took awhile to recover from the pandemic and has been perceived as less safe than areas like Georgetown, another neighborhood where he owns a hotel.
But he said the neighborhood has improved this year, and with additional investment, he thinks The Line has the potential to recover to beat its 2019 revenues.
However, the property's financial structure, with Acore Capital holding an $86M loan on the asset, means it will have to go through a foreclosure auction and have a new ownership group come to fix the asset.
"There’s no runway to stabilize the business with the current debt," Friedman said.
Friedman Capital in 2021 acquired The Graham Hotel in Georgetown for $37M, and it owns the Watergate Office Building. In 2020, Friedman said he was bidding to acquire the ground lease for the former Trump International Hotel on Pennsylvania Avenue, but it ultimately sold in 2022 to CGI Merchant Group and was rebranded as a Waldorf Astoria.
CGI defaulted on the loan it used to fund that purchase and lost the Waldorf Astoria hotel at a foreclosure auction this summer. Its lender, BDT & MSD Partners, took over the historic building with a $100M bid.
