CHICAGO — The long saga over the fate of $98 million of defaulted St. Louis convention center hotel bonds is nearing an end with the trustee planning to make a final distribution payment of $1.4 million to bondholders next month.
The trustee, UMB Bank NA, previously distributed $32 million of sale proceeds and other funds it held in June, after closing on the sale of the bondholder-owned hotel complex, which includes the Renaissance Grand and Lennox Suites in downtown St. Louis.
The trustee withheld $980,000 of the proceeds from the initial distribution as it was contractually required to hold those funds in escrow pending the expiration of a waiting period in which either of the buyers could file claims. UMB also held on to some additional funds to cover potential fees and other liabilities. The time period for filing claims has expired with none submitted.
"All assets of the trust estate, including all assets securing the bonds, have been fully and finally administered by the trustee and have been liquidated," the
No future payments will be made and the bonds will be deemed to be cancelled. The trustee intends to shut down the website it set up to post bondholder notices and reports around May 1, 2015. The website is
The distribution will bring to an end a saga that began in 2000 when the St. Louis Industrial Development Authority issued $98 million of senior lien revenue bonds. The debt was part of a complicated $266 million financing that included public funding to acquire and renovate the hotels to serve the city's convention center.
The hotels have struggled since opening in 2003. The recession's negative impact on tourism, along with competition from other new hotels, further hampered their performance. The smaller suites hotel closed in 2011. The new owners plan to renovate the facility and reopen in 2015.
Bondholders took ownership of the complex in 2009 following the obligated group's default in 2008. Bondholders tried for several years to unload the hotels but a sale was put off as they waited for the real estate market to rebound in hopes of capturing a better price.
After resurrecting its efforts in 2011, the trustee in 2012 reported that more than 50 potential buyers had expressed an interest in buying the hotels. After reviewing the offers, the trustee and a majority of bondholders opted to pursue separate sales for the two hotels.
A majority of hotel bondholders finally struck a deal last year to sell the Renaissance Grand for $26 million to investment group 800 Washington LLC. They later struck a separate deal to sell the smaller of the hotels, the Lennox Suites, to investment firm Maritz, Wolff & Co. for $3.2 million.
Both transactions hinged on the buyers striking new agreements on a variety of issues including tax credits, payments in lieu of taxes, and a new franchise pact with parties including the hotel operator, city, and state. Those agreements were difficult to complete, delaying closing dates originally targeted for earlier this year.
The St. Louis Board of Aldermen this spring signed off on an amended redevelopment agreement related to the convention center hotel complex, helping to clear the path for the default-ridden complex's sale.
The agreement included several concessions. It reduced annual payments required by the purchaser of the larger of the two hotels -- the Renaissance Grand -- on a city loan. The purchaser has agreed to invest $22 million in the hotel under an agreement with hotel operator Marriott International.
The trustee's legal representation was provided by the law firms Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC, and Spencer, Fane, Britt and Browne, LLP.
