WASHINGTON, DC-Barclays Capital’s second scheduled foreclosure auction for the St. Regis hotel in Downtown DC may be postponed, if a rumor about the transaction is accurate. The lender first planned to begin foreclosure proceedings in an auction that had been set for the end of the September, as GlobeSt.com first reported.
That date was rescheduled for Oct. 22, but contradicting multiple media reports, this new date as well may be pushed back, a source tells GlobeSt.com. A call to Barclays Capital’s attorney of record on this transaction, Shapiro, Lifschitz and Schram, was not returned in time for deadline. Barclays Capital declined to comment to GlobeSt.com.
The deal could have been postponed for any number of issues from paperwork to legal issues, the source speculated. It is also possible that it was pulled in order for the borrowers to work out a deal with the lender. A report in the Irish Times says that talks are taking place between the bank and the Irish backers of the property, which are seeking to prevent the wipe out of its $45 million equity investment.
Market observers, though, have their doubts about that particular scenario. Claret Capital, a private equity firm in Ireland, purchased the hotel at the height of the market in 2007 for $170 million. There is a $101.6-million note on the property.
When, or if, this asset ever does come to market, bidders will have a markedly different attitude than they did during other, earlier iconic hotel sales, such as the Watergate Hotel, Tom Baker, principal of Humboldt Hospitality Advisors, tells GlobeSt.com. In 2009, when the lender took it to auction, the attitude was ‘how low can I get this asset,” he says. “Now, the market has changed so much that people will be asking about the St. Regis, ‘how much can I legitimately spend for this property?’ ” The change, of course, is due to a handful of very healthy hotel sales after a dearth of nearly two years.
Baker is anticipating that a St. Regis trade would occur at a 20% to 30% premium over comparable trades of the Sofitel and Hotel Monaco. That would put a St. Regis trade in the “$500,000 per key range," Baker says. “It is a classic five-star asset with a great reputation and location.”
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
