CHICAGO - The trustee who represents investors holding $98 million of St. Louis convention center hotel debt has put off the foreclosure sale of the property by one week, with the auction now set for Monday.
Ahead of the possible sale, UMB Bank NA will hold a conference call for bondholders tomorrow to provide an update on the hotels and the scheduled auction. UMB published a notice in a local publication last month providing the legal step needed to foreclose and sell off the property on Feb. 2 if no other solution was reached.
The foreclosure proceedings were launched last month after the owners of the hotel complex defaulted on the December debt service payment. Bondholders could auction off the hotel or take over ownership in which case the trustee would likely search for a buyer.
In a notice posted late Monday on UMB's bondholder Web site, conventionhotelbondholders.com, the trustee's counsel, Mintz, Levin, Cohn, Ferris,Glovsky and Popeo PC reported that its work on a tax opinion is "still in progress." It said the sale was put off for one week - which is permitted under Missouri state law - to "insure that all prerequisites for the foreclosure sale have been completed."
The notice also reported that the obligated group has been cooperative in an effort to "provide for a smooth and cooperative transition of ownership" with bondholder consultant Jones Lang LaSalle Hotels. The latest revenue projections forecast the hotels will generate a profit of $2 million in 2009, an amount far short of what is needed to cover debt service payments.
The foreclosure option was triggered after the obligated group failed to make the full $3.5 million interest payment owed on Dec. 15. Available hotel revenue fell about $1.57 million short of the full payment. The hotel developer - Historic Restoration Inc. - late last year asked bondholders to hold off on foreclosure, but bondholders have so far refused.
A shortfall in last June's payment was covered by HRI, which purchased a majority ownership in the project originally owned by Kimberly-Clark Corp. HRI currently acts as a managing member of the obligated group, known as Gateway Hotel Partners LLC and Gateway Tower Partners.
Kimberly-Clark, through its subsidiary Housing Horizons LLC, originally held a majority stake of 85%.