David Budnick and his partner moved into the Divine Lorraine last November. It was their first place together without roommates, and they spent several months and a good chunk of money making the apartment in the historic building feel like their own.
“We’ve really started to call this place home,” Budnick told Billy Penn in late April. “We expected to be here for a few years.”
That expectation fell apart when, while the couple was on vacation, his partner’s mother texted them a link to a news story: Divine Lorraine tenants wouldn’t have the option to renew their leases, because the building was being converted into a hotel.
Budnick was confused. With almost eight months left on his lease, he hadn’t gotten direct notice of this plan before he read the article. After knocking on doors and talking to a dozen of his neighbors, he found he wasn’t the only tenant in the dark.
The company that owns the building, EB Realty Management Corporation, did not appear to notify many of the tenants about the pending change until a month later, in May. Beyond sending notice to tenants whose leases were about to be up, and confirming the transition if people asked about it, Divine Lorraine leadership offered no public details.
Three months later, after a renovation period marked by what one tenant viewed as lax security, plus elevator unavailability as hotel furniture was moved in, the transition is official.
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In late July — two days after the city approved the building’s 101 units, plus eight in an annex, for “visitor accommodations” use — hospitality company Mint House sent out a press release announcing it had added the historic North Broad Street landmark to its portfolio.
Based in NYC, Mint House specializes in “tech-enabled residential hospitality,” per the PR pitch, with units geared toward “today’s ‘digital nomad’ who can work from anywhere with a laptop.” The firm already offers extended stay suites at Philadelphia’s Public Ledger building, as well as at historic properties in Denver, New Orleans, Miami, Minneapolis, and a half-dozen other U.S. cities.
At the Divine Lorraine, guests will be able to rent 1- and 2-bedroom units “expertly curated for work, play and everything in between,” according to Mint House’s website. The apartments are outfitted with full kitchens and in-unit laundry, and people can book the units anywhere from a few days to a few months. They come with mobile check-in, a round-the-clock “digital concierge service,” the option to pre-stock groceries, and a “shop your stay” program that gives guests the opportunity to order decor online for the apartment they’re renting.
The Mint House website didn’t yet show any available dates or pricing for Divine Lorraine units as of Thursday afternoon. The company did not respond to requests for additional details.
Meanwhile, some residents are still living in the building.
The Divine Lorraine has also still been advertising apartments for rent. A July 11 phone call was met with a pre-recorded message saying, “We are now leasing apartments in Philadelphia’s most historic building.” As of Thursday afternoon, the website still said 10 of 101 apartments were available to lease.
Advertising something “without the intent to provide it as advertised” is a violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, per Jacklin Rhoads, communications director for the Pa. Office of the Attorney General. So is advertising “a certain number of items but not [having] those items available,” Rhoads said.
EB Realty did not respond to a question about whether any apartments in the building are still available to rent amid the transition. The company, owned by developer Eric Blumenfeld, also did not respond to previous interview requests from Billy Penn.
Several tenants who spoke with Billy Penn expressed frustration with having to move out sooner than they planned — while also not having the flexibility to break their leases early unless they moved to a property run by the same management company.
“My reaction was kind of this sinking feeling of like, where I once thought my housing situation was secure and sort of well planned, now all of a sudden was sort of insecure and tenuous,” one tenant, who asked to remain anonymous since he was still an active resident in the building, told Billy Penn in April.
Another tenant said if she’d known about management’s plans, she would have just made other short-term arrangements — like staying with nearby family members — instead of renewing her lease in March, a month before the transition to a hotel became known.
Budnick, who found out while on vacation, said he wondered whether the switch was already in the works when first signed a lease back in fall 2021. “It doesn’t seem believable that this decision came up overnight, or within a couple months,” he said. “This is a planned, curated, thought-out decision.”
Whether or not this summer’s hotel switch was determined when Budnick signed his lease, the idea has been floated in the past, as part of the broader plan for North Broad Blumenfeld has been working on for well over a decade.
“It’s no secret that we always intended for the building to serve hotel guests,” an EB Realty property manager wrote to tenants in an early May email obtained by Billy Penn. “In the past, the barrier to operating as a hotel was market timing. The time has come.”
Bringing North Broad into a ‘new era’
The Divine Lorraine first opened in the 1890s as the Lorraine Apartments, before becoming the Lorraine Hotel in the early 20th century. In the 1950s, Father Divine — also known as Reverend M. J. Divine, leader of the Universal Peace Mission Movement — rebranded the 10-story building as the Divine Lorraine Hotel and made it into what’s considered the first racially integrated hotel in the United States.
By the start of the 21st century, the hotel was abandoned. For decades it stood vacant, save for graffiti artists and others who entered illegally.
Enter Blumenfeld. In the early 2000s, the developer set his eyes on the North Broad corridor. He opened the Lofts 640 apartment building a few blocks south of the Divine Lorraine, convincing prominent restaurateur Marc Vetri to open upscale Italian spot Osteria on the ground floor. He also took up redeveloping the Studebaker Building, a former automobile showroom that is still seeking major ground floor tenants.
And then there was the Divine Lorraine, for which Blumenfeld always had a soft spot, he told Billy Penn in 2016. He’d initially bought in the early 2000s, but had to sell when he didn’t have the funds for redevelopment. He bought it again in 2012, and within a few years managed to turn it into a mixed-use building with around 100 apartments. In 2017, tenants started moving in.
There was talk of using part of the building as a hotel in the early days, remembers Chrissy Kind, one of the first tenants in this incarnation of the building, but it ended up not moving forward.
Several Airbnb-style rentals did get underway, however. Tenants and former tenants recall guests checking in or out as far back as 2019, which a booking.com listing confirms. The property has played host to seven units zoned for visitor accommodations since August of last year, per city records. As of Sunday, a listing shows a handful of units managed by TrustBNB still available to book.
What’s the appeal of staying in the Divine Lorraine if you’re visiting Philly? Aside from its historic landmark status, the surrounding neighborhood is booming. Some of it is directly connected to Blumenfeld, like the $56 million restoration of the Met Philly, a former opera house that reopened as a performance venue in late 2018 and has since welcomed the likes of Weird Al Yankovic, Trevor Noah, Bob Dylan, Olivia Rodrigo, and Boyz II Men.
Other developers have also gotten in on the gentrification of the corridor. Right next to the Divine Lorraine, there’s a new, 14-story apartment building called Broadridge, which features a brand new Aldi supermarket on the ground floor. A few blocks south at Broad and Spring Garden, there’s a new 410-unit luxury apartment complex with a new, giant Giant supermarket. Another 30-story high-rise is forthcoming nearby, and dozens of smaller houses are being constructed or ready for move-in up and down Ridge Avenue.
And Blumenfeld believes there’s plenty more to come, per the press release quote attributed to him. With the Mint House takeover of the Divine Lorraine, he said, “The North Broad community is about to enter a new era.”
Full transition to hotel could last a year
In mid-April, tenants who’d only heard the news about the switch to a hotel via news article, including in Axios and The Inquirer, were “in a survival mode, trying to scramble to figure out what they want to do,” said Budnick, the tenant who found out about it via his partner’s mom.
Early May is when they finally received a written explanation from management, several tenants told Billy Penn. (It’s unclear if the email went to everyone.)
Philadelphia’s requirements for notifying tenants whether they’ll be able to renew their lease once it’s up “depends on the type of tenancy,” according to city spokesperson Kevin Lessard.
For leases less than a year, landlords must “provide written notice to vacate/non-renewal/ terminate the lease which contains a good cause reason for not renewing the lease,” per Lessard. According to the Philadelphia Code, a “good cause” can include things like frequent late rent payments, a tenant not following existing lease terms, or plans not to rent out a unit at all during an upcoming renovation, among numerous other possible reasons.
That rule doesn’t apply to annual leases or leases that last longer than a year, though, Lessard said.
At the state level, the “lease is the operative document” and should have provisions that address what happens when a lease is about to expire, according to Rhoads, the Pa. attorney general spokesperson.
Even if advance notice wasn’t legally required, the sparse communication and lack of flexibility that came along with the decision have upset some tenants. The May email from EB Realty indicated the transition to a hotel is expected to last “a full year,” and detailed options available.
“It is with bitter sweet sentiment that we distribute this tenant notice letter,” the company’s regional property manager wrote to tenants. “First, we would like to thank you for the connections you have created with the Divine Lorraine Hotel. This building means so much to so many people and we are honored to have had the opportunity to share with you, our relationship with the building.”
Management would be honoring tenants’ current leases, the email read, but wouldn’t offer the opportunity for renewal. Tenants could choose to transition to EB Realty-owned Lofts 640 or possibly Mural Lofts without worrying about breaking a lease.
One former tenant, who asked to remain anonymous because of ongoing negotiations, said she wanted to leave when she heard about the transition, but wasn’t offered flexibility. She also found it difficult to find a comparable apartment within her price range.
The median rent for a one bedroom in the Philly metro area went up 4.1% between the first quarter of 2021 and the first quarter of 2022, and local vacancy rates have been cut in half in the past three years, per The Inquirer.
“I wish there would have been just a little bit more heads up, a little bit more communication, and a little bit more flexibility for us, considering that they’re saying, oh, this is the opportune time for them,” the tenant said. “It’s good for you to be able to convert all of this. But it’s not good for us, because … it’s difficult to find alternative living arrangements right now.”
Many felt the same disappointment. Kind, the tenant who was among the first to move into the building, told Billy Penn that she had hoped to live at the Divine Lorraine until she died.
“I hadn’t planned on moving,” Kind said. But she wasn’t surprised about the hotel plan. “I think that they always probably sort of had it in the back of their mind. I think just seeing the building around us … just the change in what came around here, to see the development be so great that it just changed things.”
EB Realty and Mint House are planning to open another aparthotel in Old City later this year, per the press release, which also said a new all-day restaurant and retail space is planned for the Divine Lorraine, adding to the existing coffee shop, upscale Italian restaurant, event space, cocktail bar, and recording studio at the building.
It’s not totally clear how much of the building has been converted to hotel units at this point, or how many tenants are still left at the building.
In the meantime, some tenants are just hopeful the atmosphere doesn’t stray too far from what they came to expect when most people at the Divine Lorraine were long-term residents.
In the words of the tenant who described the “sinking feeling” upon hearing the news: “I really hope that our experience can be as close to normal as possible over the next year.”