CHICAGO - The St. Louis Board of Aldermen signed off on an amended redevelopment agreement related to the city's bondholder-owned convention center hotel complex, helping to clear the path for the default-ridden complex's sale.
The board approved the new pact at a meeting Thursday and Mayor Francis Slay is expected to sign it, according to city officials. A closing on the sale could occur by June 1.
The agreement includes several concessions. It reduces 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.
A majority of hotel bondholders struck a deal last fall 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.
The closing dates have been pushed back this year as the buyers, city, and trustee UMB Bank & Trust NA finalized complex agreements needed to allow for the sale, which would benefit holders of $98 million of senior lien revenue bonds that helped fund the hotels' construction and renovations.
Bondholders took ownership of the complex more than four years ago after foreclosing on the complex in 2009 following the obligated group's default in 2008. Bondholders had for several years tried to unload the hotels but a sale was put off as they waited for the real estate market to recover in hopes of capturing a better price.
The notice cautioned: "There can be no assurance that the corrective ordinance will be enacted, or that another issue will not arise that would result in a further delay in any sale. In addition, if a closing does not occur by June 1, 2014, the purchase and sale agreements with the buyers will become terminable unless further extended."
If the closings do occur, the trustee intends to use the proceeds to first cover unpaid trustee fees, legal fees, broker fees, and other sales-related fees before they are disbursed to bondholders.
"It is not possible at this time to give any assurances that a closing of the sale of either the Main Hotel or the Suites will occur or to give any estimate of the amount of any distribution that may be made to bondholders," the notice said.
The St. Louis Industrial Development Authority issued $98 million of senior lien revenue bonds in 2000 as part of a complicated $266 million financing that included public funding to acquire and renovate the hotels. The hotels have struggled since opening in 2003 and the recession's negative impact on tourism, along with competition from other new hotels, further hampered their performance.
The bonds traded most recently last month at 24.5 cents on the dollar, up from 21.7 cents in January and down from 28 cents in December.
