Sunday, August 02, 2009
Patrick Henry Hotel to be auctioned off
The owners of the one-time downtown landmark filed for bankruptcy more than seven months ago.
JEANNA DUERSCHERL The Roanoke Times
The Patrick Henry Hotel and its land are assessed at $3.7 million, according to city real estate records.
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This week, a historic downtown Roanoke hotel property will go on the auction block.
The now-closed Patrick Henry Hotel on South Jefferson Street is in foreclosure. The 125-room hotel is scheduled to be sold to the highest bidder on the steps of the city courthouse Wednesday at 9:30 a.m.
The sale comes more than seven months after Affirmative Equities Co., the New York real estate investment and development company that owns the 89-year-old building, filed for Chapter 11 bankruptcy.
In February, the company's case was converted to a Chapter 7 bankruptcy because it was unable to reorganize and restructure its debts, according to court documents. A Chapter 7 filing involves the selling of a debtor's property to pay off creditors.
Affirmative Equities lacks a reliable source of income to pay necessary expenses for the Patrick Henry, including payroll, taxes and insurance, according to court documents filed in the U.S. Bankruptcy Court of the Southern District of New York.
Now the lender, Potomac Realty Capital of Delaware, is moving forward with a foreclosure sale for the hotel, according to a sales notice.
Bill Mason, a Roanoke attorney and substitute trustee for the Patrick Henry sale, has received inquiries from some interested buyers for the property, though no sale price has been set. Traditionally, the lender offers a starting bid that's equal to the amount the debtor owes, he said. Neither Mason nor the bankruptcy court would disclose the total debt owed by the hotel owners.
At the time of the Patrick Henry sale, a deposit of $275,000 or 10 percent of the price, whichever amount is lower, is due, according to the sales notice. The buyer must close on the property 30 days later.
The Patrick Henry and its land on Jefferson Street and Bullitt Avenue are assessed at about $3.7 million, according to city real estate records.
A Roanoke official and a downtown advocate have high hopes that the storied hotel property can be revived.
The Patrick Henry holds memories of important occasions, from wedding receptions to Kiwanis Club meetings and school dances.
Numerous retail businesses have come and gone from inside the property, including a restaurant, hair salon, barbershop and home design store.
It would best serve the city's downtown district for the Patrick Henry to reopen and thrive as some kind of business. It doesn't necessarily have to be a hotel, said Douglas Waters, interim president of Downtown Roanoke Inc.
Plus, revitalization of the dilapidated property would complement other development activity on Jefferson Street, such as the recent opening of the new Social Security Administration office building across the street from the hotel, said Brian Townsend, assistant city manager.
"It would be a very big plus for us to have that property go in the hands of an owner that had some renovation plans that would be implemented fairly quickly for an adaptive reuse or anything else that may make market sense," he said.
There's no vetting process for the new Patrick Henry owner, though Waters said he hopes whoever bids on the property will "have access to the capital that it will take to do something to the property."
"In today's economic environment, for somebody to make a bid suggests to me that they will have some capital behind them," he said.
Affirmative Equities, led by President Andrew Jubelt, bought the Patrick Henry Hotel in 1990 for $3 million with plans to convert it into senior housing. The company priced its conversion project at $28.8 million, based on past interviews.
But those plans never materialized, and the hotel fell into disrepair. It closed in 2007 after its occupancy permit expired, and the building was determined to be out of compliance with city code.
Efforts to reach Jubelt for comment last week were unsuccessful. The phone number for Affirmative Equities' New York office has been temporarily disconnected.
Affirmative Equities owns the Patrick Henry through a limited partnership, Patrick Henry Hotel Associates.
Last year, the hotel was named one of the Roanoke Valley's endangered sites and a neglected property by the Roanoke Valley Preservation Foundation.
A variety of financial troubles seem to have stunted the owners' restoration plans for the Patrick Henry, once considered a downtown gem. Affirmative Equities has averted foreclosing on the property at least four times since 1990, and at one time, it owed thousands in unpaid federal taxes and architect's fees.
According to its Chapter 11 bankruptcy filing, Affirmative Equities owed between $1 million and $100 million to between one and 49 creditors, including the city of Roanoke.
The company has about $113,000 in unpaid city real estate taxes, said Dana Long, manager of billings and collections for Roanoke.
The city likely will be paid off through the auction sale, City Attorney Bill Hackworth said.
February bankruptcy documents state that Affirmative Equities received an offer to purchase the Patrick Henry for $5 million. But the bidder did not sign a contract. The identity of the bidder and the date of the offer is unclear.
The company has not received other offers for the property, though it hired two brokers to market the hotel, according to court documents.
