Renaissance Hotel Owner Presented Foreclosure Forbearance Plan to Bondholders
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By :
Leticia Carvalho
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The owner and developer of Renaissance Grand Hotel in St. Louis, Missouri, HRI Properties, has presented its foreclosure forbearance proposal to bondholders, their lawyers and trustees.
HRI made the proposal to bondholders as part of an effort to find a restructuring program that can help improve the lodging market’s conditions and the hotel’s value.
The Renaissance Grand, which started operations in 2003, has incurred a total debt of $98 million and its revenue often failed to cover the hotel’s interest payments. Because of this, Kimberley-Clark, which owns 85 percent share in the property, was forced to contribute about $14 million to reinforce operating expenses.
HRI and Kimberly-Clark representatives said that both companies have decided that they would not provide funds to offset the hotel’s $1.4 million revenue shortfall to meet its interest payment of $3.5 million due on December 15.
Kimberley-Clark is negotiating the transfer of its ownership share in the Renaissance Grant to HRI. In the process, the company has turned over all restructuring efforts for the property to HRI.
Included in the foreclosure forbearance plan presented to bondholders is a proposal to give HRI and Marriot Corp., Renaissance Grand’s manager, until the 31st of December 2009 to boost the hotel’s performance to avoid filing foreclosure proceedings.
In its presentation, HRI outlined the Renaissance Grand’s operations and its projection that the hotel’s profit for 2009 would total $1.4 million, a decrease from $5 million total earnings in 2007 and $3.8 million total in 2008.
HRI also included in the presentation its projection that the hotel’s occupancy would be reduced to 60 percent in 2009, a decrease from 64.8 percent total occupancy in 2007 and 63.2 percent total in 2008.
If bondholders approved the foreclosure forbearance option, HRI is willing to serve as the bondholders’ asset manager at no cost until the 31st of December 2009.
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Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.
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