The St. Louis Post-DisPatch this week reported that HRI Properties was not able to meet their obligation on debt service for the Renaissance Grand Hotel in downtown St. Louis. See my previous blogs. All concerned Peoria taxpayers should be following this event as it may be a foreshadow of the planned $108 million complex involving the Pere Marquette and surrounding businesses. Wednesday's JSEB Editorial, "Hold city's leaders accountable on hotel deal" quotes Mayor Ardis as saying "this project pays for itself". Read this editorial carefully.
On Tuesday the JS quoted Chris Setti, an assistant to Interim City Manager Hollings, "With projections ccme some risks".
If the risks are so few why is the "private cash" only $4 million on a $102 million, also projected, project?
The JSEB further states "the mayor and nine other council members voted to in favor of backing this $102 million hotel with nearly $40 million from taxpayers should be held accountable for what they say and do". From what little I have learned from the city council, which is nothing more than I read in the JS, this "transparent" (Read The Peoria Chronicle blogs of today) project appears to put the city (taxpayer) in a large crap shoot with taxpayers dollars.
As reported from St. Louis today, "The developer of Renaissance Grand Hotel in St. Louis, Missouri, HRI Properties, has presented its foreclosure forbearance proposal to bondholders, their lawyers and trustees. HRI made the proposal to bondholders as part of an effort to find a restructuring program that can help improve the lodging market's conditions and the hotel's value.
The Renaissance Grand, which started operations in 2003, has incurred a total debt of $98 million and its revenue often failed to cover the hotel's interest payments. Because of this, Kimberley-Clark, which owns 85 percent share in the property, was forced to contribute about $14 million to reinforce operating expenses.
HRI and Kimberly-Clark representatives said that both companies have decided that they would not provide funds to offset the hotel's $1.4 million revenue shortfall to meet its interest payment of $3.5 million due on December 15.
Kimberley-Clark is negotiating the transfer of its ownership share in the Renaissance Grant to HRI. In the process, the company has turned over all restructuring efforts for the property to HRI.
Included in the foreclosure forbearance plan presented to bondholders is a proposal to give HRI and Marriot Corp., Renaissance Grand's manager, until the 31st of December 2009 to boost the hotel's performance to avoid filing foreclosure proceedings.
In its presentation, HRI outlined the Renaissance Grand's operations and its projection that the hotel's profit for 2009 would total $1.4 million, a decrease from $5 million total earnings in 2007 and $3.8 million total in 2008.
HRI also included in the presentation its projection that the hotel's occupancy would be reduced to 60 percent in 2009, a decrease from 64.8 percent total occupancy in 2007 and 63.2 percent total in 2008.
If bondholders approved the foreclosure forbearance option, HRI is willing to serve as the bondholders' asset manager at no cost until the 31st of December 2009".