SHE WON'T GO!
10/27/2011, the Webbs announce they have dumped Studio Gang and the more reasonable plan for the CentrePointe block and instead are going backwards to their previous J.W. Marriott colossus idea. After dumping Gang, the Webbs hired a local firm, promising their new ideas in just two to three weeks. Reported the Herald:
Webb hired Lexington firm EOP Architects to incorporate Gang’s ideas into a design for the block. EOP already was involved with the project as one of Gang’s guest firms.
“We are excited to be able to take a great vision in terms of the master plan and move forward with it,” EOP’s Rick Ekhoff said Thursday. He said he hoped to make the EOP plan public in two to three weeks.
That was over six weeks ago.
Woodford Webb did not respond to a request for comment.
Overly ambitious timelines are nothing new to the Webbs, of course. On the CentrePointe project alone they have repeatedly promised action and news within near-term goals — Dudley’s almost comic use of “30 to 60 days” to promise exciting news of big investors and groundbreaking were so constant they become known as a “Webb Unit” (e.g. here, here, or here).
It remains unclear if these continually missed self-imposed deadlines are indicative of a lack of business acumen or, rather, are a miscalcualted attempt to pacify the public in the immediate while invariably letting them down in the long-term. (Which is kinda the same thing.)
At the end of October, the rebranded CentrePointe team said there’d be a new plan in a matter of weeks. It’s been six and they don’t appear to have anything.
In other hotel news… the J.W. Marriott in Tucson, AZ is facing foreclosure:
The JW Marriott Starr Pass Resort & Spa – the earth-toned luxury hotel perched in the saguaro-strewn slopes of the Tucson Mountains – is facing foreclosure.
The owner of the 575-room hotel, Starr Pass Resort Developments, has defaulted on a $145 million loan recorded in August 2006, says a foreclosure notice filed in the Pima County Recorder’s Office.
An auction on the property has been scheduled for 1 p.m. Feb. 2 on the eastern steps of the Pima County Courthouse, 110 W. Congress St.
Let that be a hot tip to all you potential CentrePointe investors out there — if you want to drop hundreds of millions on a J.W. Marriott Hotel you could give it to the somewhat questionable Webbs or you could just buy one that’s already built and save some scrilla. Plus Tucson is warmer.
It’s not just Tucson. The hotel foreclosure market is booming, as Lodging & Hospitality reported a couple weeks ago:
Hotel Foreclosures an Oncoming ‘Train Wreck’
Steve Van hates being the pessimist, but he can’t help it. The CEO of Prism Hotels & Resorts says comparing the last two years of hotel distress to what’s coming is like comparing “a car wreck and a train wreck.”
He doesn’t see any other way to avoid the oncoming flood of CMBS maturities that originated in 2007, at the absolute pinnacle of the lodging industry, as well as a wave of costly property improvement plans now being mandated by franchise companies emboldened by strong operating results.
Van knows a thing or two about hotel distress. The Dallas-based hotel management company he founded in 1983 has handled more than 150 receivership assignments since 2000. It currently is acting as receiver at approximately 30 properties and Van believes many more are coming.
“How long can you hold your breath?” he asks of the extend-and-pretend strategy employed by many lenders and owners the past two years. “At some point you start getting brain damage.”
The delinquency rate on securitized hotel loans was at 14.12% through October, highest among all commercial real estate classes, according to Trepp, a New York-based analytics firm that tracks the commercial mortgage-backed securities (CMBS) industry. Van believes the number could reach 50% next year with all the loans coming due that originated in 2007 and earlier that were extended.
And Bloomberg/BusinessWeek reports:
Hotel Lenders Avoid Foreclosures as $17.5 Billion in Loans Loom
Wall Street banks have arranged $27.2 billion in bonds linked to skyscraper, shopping mall, hotel and other commercial property loans this year, compared with $11.5 billion in 2010, according to data compiled by Bloomberg. Sales plummeted from a record $232 billion in 2007. Lenders pulled back from making new loans to package into securities in July as European debt woes roiled credit markets, making it harder for borrowers with debt coming due to refinance.
Hotel foreclosures may accelerate amid a sluggish economic recovery. In the last two months of this year, $5.52 billion in loans backed by hotels are maturing, followed by $9.11 billion next year and $2.9 billion in 2013, according to New York-based data provider Trepp LLC.
There will be a “huge increase’” in U.S. hotel foreclosures next year as debts come due and little financing is available, said Robert Sonnenblick, a hotel developer.
The wave of commercial mortgage-backed securities needing replacement debt “is going to be a close-to-catastrophic problem,” Sonnenblick, chairman of Sonnenblick Development LLC, said today at the Bloomberg Commercial Real Estate Summit in New York. “The end result of all of this is you’re going to see a huge increase of hotel foreclosures.”
There is some good news here. The Webbs won’t face foreclosure on CentrePointe any time soon because, so far, they haven’t been able to build it. Look on the bright side.
KentuckyElection.org
BONNIE PRINCE BILLY
David, what you left out of your comments on the Tucson foreclosure is the FACT that it is the developer who is being foreclosed upon and not the hotel.
A key line of reasoning from the cited article says:
“Alex Ahluwalia, the resort’s general manager, said the appointment of that receiver will have no effect on the Marriott resort’s day-to-day operations.
“This is purely a matter between the owner and the lender,” Ahluwalia said.
“The hotel has always been profitable and it’s still today profitable,” he said.”
Your constant harping on CentrePointe is beginning to look very petty.
Hot debate. What do you think?
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your definition of constant is strange. as for your larger point, i believe i made that clear — if an investor wants to pay for a JW Marriott, there’s one they can just buy. i didn’t indicate that marriott itself was on the line. your intermittent defensive comments continue to be cute, or, perhaps, pretty.
Dave: any word from EOP? Just curious…
And thanks for your continued CentrePointe highlights. It’s a vacant block in the middle of our city. And it’s been that way for YEARS now. YEARS, people!!
When was the last time you traveled anywhere, Mr. Clean Streets, and saw a city block that sat empty & useless for YEARS??? Never, because other cities wouldn’t allow a developer to level a city block without first providing proof of funding to rebuild.
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I had a conversation with a Senior at Transy that reinforced that I am getting old but it also is germane to this post.
The topic of CentrePointe came up and she commented that she has never known that block with buildings. For some reason this blew my mind.
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I disagree. It is germane because it highlighted how long the block has been vacant.
While I knew intellectually that the buildings have been gone for almost 4 years, having it put into the perspective that a person could come to Lexington and receive a diploma since they were razed, brought home the length of time on a more gut level.
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EOP never responded to my initial inquiry to them weeks ago, so i’m guessing — as it should be — it’s up to the developer/their employer. but all others are welcome to try.
Yep. The city should instigate condemnation proceedings, pay the developer for his losses, and turn the block into a city park. While it would be expensive, future citizens will applaud the effort.
BTW, isn’t that the block that CM Clay(in his office), famously, held off a crowd of pro-slavery supporters with his 2lb swivel???
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Agreed. I love public green space, but this is too valuable a location for the viability of downtown.
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How much is the Streetsweeper Unit? Do you ever get tired of cheerleading failure?
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What would the final cost of condemnation be after you factor in resale of property or parts thereof, private construction dollars spent in the community, paid wages and city payroll taxes? Also, eventually, add in the property taxes on something more valuable than the present rumination pasture, plus the more rapid addition of jobs other than lawn care. Of course, the nature and scope of the block design would be the result of consultation with city planners. Does anyone have the means to calculate this?
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