Owner of Dearborn’s Hyatt Regency Defaults on Loan
The owner of Dearborn’s 33-year-old Hyatt Regency hotel has fallen on hard times, defaulting on a loan because of cash flow problems.
The owner of Dearborn's Hyatt Regency hotel will give up its control of the hotel, taking a $10.9 million loss.
According to Crain’s Detroit Business, the owner of Dearborn’s Hyatt Regency hotel — Dallas-based real estate investment trust Ashford Hospitality Trust Inc. (NYSE: AHT) — will give up its control of the hotel, taking a $10.9 million loss.
Ashford Hospitality Trust Inc. (NYSE: AHT) disclosed the change in its second-quarter earnings report. The company stopped making payments in June on its $29.1 million mortgage because the operating cash flow for the hotel did not cover the principal and interest payments, Crain’s reports.
As a result, the lender issued a notice of default.
“We have not cured the notice of default and intend to fully settle the debt via a deed-in-lieu of foreclosure or foreclosure of the hotel property,” the company stated in its 10-Q report.
The company’s analysis of the value of the property resulted in a loss of $10.9 million.
The hotel, built in 1976 at 600 Town Center Drive, is 14 stories tall and has 772 rooms.
Crain’s reports that the original lender on the property was Prudential Financial, however, the special servicer on the loan, who will take control of the property, is CW Financial, according a real estate source with knowledge of the financing of the property.
It isn’t clear what, if any, impact the loan default will have on the City of Dearborn’s desire to secure funding to construct a Convention Center near the hotel. Clearly, the hotel needs more business and a Convention Center could be one way to generate additional business for both the Hyatt and Dearborn’s Ritz-Carlton, just down the street.
August 25th, 2009 at 10:35 am
‘Clearly, the hotel needs more business and a Convention Center could be one way to generate additional business’ – and if the City of Dearborn did somehow manage to secure funding to build this center and it fails – we are left with another ‘Super Block’. The city needs to build up the west end and get some businesses in that area before it jumps off the deep end once again.
August 25th, 2009 at 5:00 pm
Maybe it could house the Gitmo prisoners, as they will require nothing but the best in accommodations.
August 25th, 2009 at 8:47 pm
Donna, You hit the nail on the head. No offense, Said, but why in the world would they put out more money on another iffy project. The Hyatt has been throught multiple owners since it was built, and I don’t think it’s ever been terribly successful; put the blame squarely where it lies–on the management. It’s too bad that it wasn’t run better and I feel bad for the employees who don’t deserve this.
Mom, that’s for the gfaw, as always.
August 26th, 2009 at 8:33 am
OOps, I meant to say, Mom, thanks for the gfaw.
August 26th, 2009 at 8:54 am
What assurance is there that the Hyatt will have future successful management that will act as a catalyst for groups to hold conferences/conventions in Dearborn? It appears to me that constructing a convention/conference center is putting the cart before the horse if there is no hotel/s to stay at within a reasonable distance from the conference center. If the Hyatt should turn into a second or third rate hotel, who would want to stay there? The Ritz Carlton is simply too expensive in my estimation and I wonder how well it is doing in this economy. The current city administration had better look long and hard at this issue before racing into the construction of a convention center.
August 26th, 2009 at 10:37 am
Bill – sort of like building parking garages before anything else is built. I think the ‘administration’ wants this so bad that they really don’t care how they get it.
August 26th, 2009 at 1:58 pm
Donna:
That is the problem. How can anyone justify building a convention center if no one is willing to come here. Why would a convention come to Dearborn if there are no nice places to stay. Aside from the DoubleTree/Hilton at Ford and Southfield, what reasonably (reasonably priced) nice place would anyone stay? What if the Hyatt becomes something less that a first class hotel? Would conventions in Dearborn exist for those in Michigan or would Dearborn be the site for national conventions? And yes, the administration is great into rushing into things. For example, the city administration is all for this high-speed rail between Detroit/Dearborn to Jackson and beyond. Why? What is wrong is the same rail system that exists now? What overwhelming ridership requires a high-speed rail between Dearborn and Jackson? Just how much is this going to cost us? Mayor O’Reilly was quoted in either Monday or Tuesday’s Freep as saying “property values are going down” as part of a reason why the City of Dearborn is seeking to become part of an insurance pool for its employees in order to save money. It sounds like they are cutting costs by the penny and finding new and inventive ways to spend much more on items that I have yet to hear a credible explanation for. I have mentioned it before on this blog, but folks better take a much harder look of what is going on in this town and start calling out the elected officials making all these grand plans for us.
August 27th, 2009 at 7:24 pm
Couldn’t agree with u more. Big O’Reilly feels he is invinceable, no long range thinking, because he is going to step aside when the shit hits the fan.
August 28th, 2009 at 12:07 am
The Hyatt would make a cool abandoned building. We might give the Michigan Central Station some competition as a mecca for urban explorers. Just imagine that soaring courtyard overgrown with hanging plants and trees. Maybe we could even charge admission.
Dearbornette, if the Hyatt has been through multiple owners, as you say, then perhaps it isn’t the management that is to blame. If no one could make it work then maybe it was never necessary in that location in the first place.
Bill, I agree that the current mayor often has very shortsighted and uncreative plans. He doesn’t seem to understand how to move Dearborn forward, not backward. But you do need to get your facts straight before you call everything a shortsighted waste.
There is no high speed rail to Jackson. There is a so called high speed rail which is a federally funded upgrade of the line from Pontiac to Chicago. There is also a proposed commuter line from Detroit to Ann Arbor. The rail proposals do not fall into the shortsighted category but I also believe they pre-date the current mayor. Both would be excellent catalysts for development if implemented correctly.
I still have my doubts about the convention center. It could lock in customers for the hotels I suppose. But if I recall correctly Troy was the first choice for a proposed center. They declined to proceed with it. Why is that and why are we so eager to take it up? Maybe Troy realized there just wasn’t the market demand for it to justify the costs. I’d like to learn more about this. I also fear that the mayor would handicap such a facility with his usual backward thinking.
This could all be pointless anyway since I read today that a developer is proposing just such a conference center/hotel to top downtown Ann Arbor’s soon to be built underground parking structure. If they proceed and we also do ours would be obsolete before the shovel hit the ground.
September 1st, 2009 at 9:26 am
Please Jack, just forget about the convention center, O.K. If it will help the Hyatt & Ritz so much, why don’t THEY build it? Enough subsidzing private buisnesses already, capisce? How about the city builds me a garage? It will increase tax revenue, improve property values & quality of life (ie: the neighbors won’t have to look at my family jalopies & rusty tricycles).
Of course, the city building a garage for a private citizen sounds absurd, doesn’t it? How is this conference center really any different, besides of course the massive cost difference.? Right now, we should all just be gracious that our fair city is not in recievership & our services are still excellent.