Governor Hotel, Princeton Building Redo Begins

PORTLAND-A multi-million renovation of the Governor Hotel and the adjoining Princeton Building is under way here following a recent financing. The approximate $12.9-million first mortgage loan allowed Historic Hotel Partners LP, an affiliate of Grand Heritage Hotel Group, to pay off a six-month facility that was used to acquire the property and take out about $3.5 million for renovations, according to Elliott Eichner of Sonnenblick-Eichner Co., which sourced the loan.”We were able to get a loan … despite current cash flow at a debt service coverage ratio below 1.0X,” Eichner tells GlobeSt.com. “We got the lender to buy off on Grand Heritage executing its plan and improving cash flows post renovation.”The plans include relocating the hotel entrance and lobby from 10th Avenue to 11th Avenue, creating room for the popular Jake’s Grill to expand its presence in the building. Additionally, a new entrance on Alder Street will be built for the longtime basement gym, which the current lessee will convert to a day spa for servicing both hotel guests and the public. As well, a 10,000-sf ballroom most recently utilized for executive office suites will be restored and leased to Jake’s for catered events. Additional elevators and guest room renovations are also part of the plans. The goal is to have the renovations complete by November.Listed on the National Register of Historic Places, the Governor Hotel was originally completed in 1909 and extensively renovated in 1986 and 1991. The six-story, 100-room full service luxury hotel is located Downtown, immediately north of the financial and retail districts. The hotel is connected to the Princeton Building, which was completed in 1923 and remodeled in 1984 and 1991. It currently serves as the hotel’s West Wing.With equity from locally based Endeavour Capital, Grand Heritage Hotel Group acquired the Governor Hotel and Princeton buildings in October 2003 for $14.5 million. The seller, Governor Hotel Associates, reportedly was facing a foreclosure lawsuit filed by lenders.The hotel’s new general manager Scott Brooks tells GlobeSt.com that the mezzanine office space just inside the entrance to the Princeton Building is being renovated for use as the headquarters of Grand Heritage, which relocated its operations from Annapolis, MD, following the acquisition.With regard to the financing, Brooks says that the lender has been pleased with the company’s performance to date. “We have signed new leases and brought in expertise with regard to revenue generation and yield maintenance that have made a significant impact,” says Brooks. “It has made a 200% difference in net operating income; we’re exceeding our proforma.”In addition to the Governor Hotel, Grand Heritage’s portfolio includes the Stanley Hotel in Estes Park, CO; the Vanderbilt Hotel in Newport, RI; and the Biltmore in Providence, RI. The company’s goal is to create an international portfolio of historic hotels.