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Reccession and Tough Lending Market Forcing Hart Hotels to Allow
Their Amherst Holiday Inn to go Into Foreclosure

Value of Property has Declined 50% Since Refinancing in 2007

By Sandra Tan, The Buffalo News, N.Y.McClatchy-Tribune Regional News

Apr. 7, 2010--The owners of the oldest chain hotel in Amherst are letting it go into foreclosure, saying the recession and tough lending market are making it impossible to operate profitably.

The Holiday Inn on Niagara Falls Boulevard, just north of the Youngmann Highway, is being operated by a new management team. The property is expected to be auctioned in the next few months.

The 200-room hotel opened in 1967 under the ownership of Hart Hotels, a prominent Buffalobased hotel and restaurant company. While Hart Hotels technically remains the owner, President and CEO David P. Hart said the hotel's debt has become impossible to carry.

"It's sad for us," he said. "It's very sad for us." Hart said the hotel's value has dropped 50 percent since the property was refinanced in 2007. Its earnings before interest, taxes, depreciation and amortization is down 30 percent, he said.

The hotel remains open for business throughout the ownership transfer process and is currently on track to go to public auction within the next few months, said Hart and Kenneth Graber, the Lancaster lawyer currently serving as the court-appointed receiver for the property.

Graber has hired Marshall Hotel and Resorts, which specializes in the management of distressed hotel properties, to run the hotel until a new owner comes on board. That company took over management duties this week and is retaining the hotel's current employees, he said.

Graber, meanwhile, is working to keep the hotel's liquor license current.

There's some possibility the Holiday Inn may still remain part of the Hart Hotels portfolio. The current owner can try to refinance the $8 million in hotel debt with a different lender before the hotel is sold at auction, Graber said, or Hart Hotels can bid on the property at auction with other prospective owners. The current lender is Wells Fargo as trustee for a Banc of America registered security.

Hart was not optimistic about refinancing the debt. He said the company suspended mortgage payments last year in hopes of negotiating more favorable payoff terms with the current lender, but that didn't work out.

Hart has expressed more interest in trying to reacquire the property at auction if it's more realistically valued, he said.

"If it goes to public auction, we may be a bidder," he said, also stating, "This isn't a situation where the hotel has no business. It just doesn't have enough business to satisfy the contract for debt service."

Hart said his company's other 10 hotels have also taken financial hits over the past year -- like many others around the country -- but are more successfully weathering the poor economic climate.

Hart Hotels also owns the Candlewood Suites and Hotel Indigo in Amherst.

The age, layout and location of the Holiday Inn at 1881 Niagara Falls Blvd. have all worked against it in recent years, Hart said.

The hotel was built on five to six acres of land prior to the existence of the University at Buffalo's North Campus, Hart said. Other newer hotels, including ones owned by Hart Hotels, have since been built closer to the campus.

The Holiday Inn also has banquet facilities and a large food and beverage operation, Hart said.

"After 43 years, we just don't build them like that anymore," he said.

Given the hotel's franchise obligations and the financial interests of everyone involved, Hart said he believes the hotel likely will remain open as a Holiday Inn regardless of new ownership.

stan@buffnews.com

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Copyright (c) 2010, The Buffalo News, N.Y.

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