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BlackRock Twice Pursued Deals to Sell Pittsburgh Hilton to Tampa Cardiologist
but Hilton Rejected Dr. Patel as a Potential Owner

By Mark Belko, Pittsburgh Post-GazetteMcClatchy-Tribune Regional News

Oct. 28, 2010--The New York lender now battling a Tampa cardiologist for control of the former Hilton Pittsburgh twice was willing to sell the hotel to him last year.

Eloisa Mascarenas, a vice president for BlackRock Financial Management Inc., testified in U.S. Bankruptcy Court Wednesday that the lender pursued deals with Dr. Kiran C. Patel for the hotel in the summer and fall of 2009.

BlackRock is seeking court permission to foreclose against Shubh Hotels Pittsburgh, the hotel owner, because of a mortgage default triggered by the decision by Hilton Hotels & Resorts to terminate its franchise license agreement with Shubh.

The termination prompted Shubh to file for Chapter 11 bankruptcy protection, so far blocking BlackRock from foreclosing.

Since then, Shubh has transferred full equity ownership to Dr. Patel, who has filed a plan of reorganization that would rebrand the hotel as a Wyndham Grand under Wyndham Hotels & Resorts.

Ms. Mascarenas said Dr. Patel was first brought to BlackRock in the summer of 2009 through Atul Bisaria, a Shubh principal. At the time, Dr. Patel was willing to buy the property and assume Shubh's $49.6 million mortgage with BlackRock. The lender "approved" Dr. Patel for the sale, Ms. Mascarenas said. However, the deal never occurred because Hilton "rejected" Dr. Patel as a potential owner, she said.

That fall, Dr. Patel teamed with The Related Group of Miami in another attempt to buy the property. Ms. Mascarenas testified that BlackRock again was prepared to sell to Dr. Patel. That deal fell through when Mr. Bisaria said he had another buyer willing to pay $67 million for the property. That never occurred, and BlackRock ended up renegotiating mortgage terms with Shubh in an effort to keep the hotel afloat.

Under questioning by James Gassenheimer, Dr. Patel's attorney, Ms. Mascarenas acknowledged that BlackRock considered foreclosing against the property in 2009, but decided against it. Through questioning, Mr. Gassenheimer implied that BlackRock didn't foreclose then because it had valued the hotel at $50 million and didn't think it would get its money back. He also claimed that it wants to foreclose now because the hotel value has increased.

While Ms. Mascarenas conceded that the estimated value in 2009 made it unattractive for foreclosure, she insisted that was not the reason BlackRock held back. "At that point, we just didn't want to put any additional capital into the property," she said. "It was a business decision."

Given the problems BlackRock has had with Mr. Bisaria, Mr. Gassenheimer asked why it would fight the transfer to Dr. Patel, a move the lender claims is improper.

Ms. Mascarenas said BlackRock hasn't been happy with hotel operations in the last year when she said Dr. Patel was "involved."

Not only did the hotel lose the Hilton brand last month, the lender also has had problems with Dr. Patel's "lieutenants," Jai Llawani and Frank Amedia, she said.

However, Dr. Patel has denied having a business relationship with Mr. Llawani, CEO of Black Diamond Hospitality, which served as Shubh asset manager.

Mr. Amedia is Dr. Patel's manager at the hotel. Ms. Mascarenas said BlackRock is concerned about his involvement because he has no experience operating a large hotel.

Dr. Patel has said he did not become owner until the equity transfer in late September. He said he did so to protect $3.7 million in loans he gave to Shubh to keep the hotel operating.

Ms. Mascarenas also testified that she prepared a memo in August recommending foreclosure to "extinguish" $970,000 in liens against the hotel filed by vendors and contractors. But she added she never sent the memo. Ms. Mascarenas previously testified BlackRock "would consider" paying vendors under a reorganization plan. Dr. Patel's plan would pay allowable claims in full over several years.

Mark Belko: mbelko@post-gazette.com or 412-263-1262.

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