CHICAGO — The trustee representing St. Louis convention center hotel bondholders will hold a teleconference at the end of the month to update investors — who now own the hotel — on first-quarter performance and the complex’s revised prospects for the remainder of the year.

The call — being held by trustee UMB Bank NA — is scheduled for April 30 at 3 p.m.  Central Daylight Time. Consultant Jones Lang LaSalle Hotels will provide the update and revised forecast for the hotel complex’s performance.

Bondholders took ownership of the facilities earlier this year after foreclosure proceedings. Those followed a default in December on debt service payments for a $98 million issue in 2000 by the hotel developer and lead member of the obligated group, Historic Restoration Inc.

Bondholders were told in a February report that revenue and occupancy levels at the downtown St. Louis hotels are expected to continue to slide this year amid a deteriorating economic environment. The gloomy assessment echoed concerns raised by Moody’s Investors Service last month when it downgraded the credit to Ca from Caa2, warning that it is unlikely bondholders can recoup their full investment in an eventual sale of the facilities.

Jones Lang has been charged with coming up with operational and financial recommendations for the facilities that remain open and are managed by Marriott Corp. The report outlined potential cost savings. Jones Lang has asked Marriott to undertake various cost-saving measures of between $250,000 and $1 million.

The consultant has also been looking at other measures, including the possible closure of the Renaissance Suites hotel, to save money. The complex is made up of the 918-room Renaissance Grand and the 165-room Suites.

Revenues were previously revised downward from budgeted estimates by $4 million to $40.2 million and the expected net profit was revised downward by $1 million to just $556,632. The hotel complex had a nearly $4 million profit last year. Maintenance costs are also on the rise. The lodging industry in the city has experienced slow growth in recent years, and the outlook for this year is worsening.

The St. Louis Industrial Development Authority issued the senior-lien revenue bonds in 2000 as part of a complicated financing scheme to acquire and renovate the $266 million hotel complex that serves the city’s convention center. The uninsured bonds initially garnered a low investment-grade rating from Moody’s but fell into junk-bond territory as revenues failed to meet original projections. 

 

 

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