|By Tim Bryant, St. Louis
Post-DispatchMcClatchy-Tribune Regional News
January 15, 2009 - The cash-poor Renaissance Grand & Suites Hotel downtown is headed toward foreclosure a month after the owners missed an interest payment on a $98 million debt.
However, the hotel remains open and guests should notice nothing awry, a lawyer for the hotel's bondholders said Wednesday.
A foreclosure sale is scheduled for noon Feb. 2 at the Civil Courts Building. The foreclosure notice, filed Tuesday, came after the hotel owners defaulted on a $3.5 million interest payment due Dec. 15 on the hotel's bond debt.
That missed payment, the latest financial setback for the $265 million, 1,083-room hotel complex, led bondholders to seek foreclosure.
Tom Leonhard Jr., president of Historic Restoration Inc., the New Orleans company that has a ownership stake in the hotel, didn't return a call seeking comment.
Paul J. Ricotta, a Boston lawyer for hotel bond trustee UMB Bank, said several things -- among them a sale -- could happen before the potential foreclosure in less than three weeks.
"If somebody wants to make a proposal, obviously, we'd listen to any reasonable proposal," he said.
Marriott will continue to run the hotel for the foreseeable future, said Ricotta and a spokeswoman for UMB Financial Corp., in Kansas City. Ricotta said the hotel, the region's largest, will remain open on Feb. 2, "the third and any other time in the future."
The Renaissance Grand, which opened six years ago as the city's main convention hotel, has struggled financially from the start.
It has turned a small operating profit but made little headway in paying off long-term debt. The hotel's general manager has said business will probably remain slow this year and has warned that the hotel will fall short another $3.5 million of interest due in June.
The hotel also is falling behind in stashing away money to buy new furniture and fixtures.
Blase noted that if no one buys the hotel, UMB can take control of the hotel on behalf of the bondholders and look for a buyer, much the way a bank or other lender often takes back a house when homeowners are unable to pay their mortgages.
The complex is made up of four structures: a new tower attached to the extensively renovated Statler, the former Lennox next to America's Center and across Washington Avenue from other parts of the hotel, plus new ballrooms on Washington west of the former Statler.
Kathleen "Kitty" Ratcliffe, president of the St. Louis Convention and Visitors Commission, did not return a call seeking comment on the situation of the hotel.
Gary Andreas, a hotel consultant, said "there's probably a better-than-even chance the foreclosure sale will go through." He said the hotel's financial performance improved last year but remained "way, way short of where it needs to be" to cover its debt.
Andreas, principal at H&H Consulting Inc. of Chesterfield, said bondholders would probably find buyers looking to get the hotel at a low, low price.
"In the best case, the bondholders have to be looking at 40 to 45 cents on the dollar," he said.
He said offers from potential buyers would be based more on the Renaissance Grand's operating revenue than on making an attempt to take on the hotel's long-term debt.
Regardless, any likely sale price would "be really hard for the bondholders to swallow," Andreas said.
"It's going to be interesting," he added.
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