Westin Book Cadillac owner says his hotel is heading into foreclosure

Yikes. Just in from Crain's...

• Westin Book Cadillac downtown may be heading toward new ownership with pending foreclosure
• Property underwater, valued at $74.6 million, less than its CMBS loan debt of $77 million

The owner of one of the landmark redevelopment projects in the city this century says his property is headed into foreclosure after months of missed loan payments.

John Ferchill, who owns the Westin Book Cadillac hotel in downtown Detroit, said in an email that although the property hasn't been foreclosed upon yet, his lender has told him it will.

Ferchill has $77 million in commercial mortgage-backed securities debt through Citi Real Estate Funding Inc. that has been delinquent since May.

Presuming it comes to pass, and as far as I can tell, it would be the first major commercial real estate CMBS foreclosure in this region that can directly be tied to the COVID-19 pandemic.

OK... the top 8 floors of the 33 story building are 65 luxury condo's. So the building is worth more than just the hotel portion.

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Originally Posted by Gistok

OK... the top 8 floors of the 33 story building are 65 luxury condo's. So the building is worth more than just the hotel portion.

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I wondered about those too, not to mention the ground floor businesses and restaurants. If those are gone a lot of the appeal for the condos would seemingly diminish. It gets complicated.

The sausage-making of the financing of the hotel was a multi-party chaos. My late friend Tony Pieroni [3WC] tracked it and considered it was a house of cards.

Sounds like the bank is more interested in getting their hand on the asset rather then working with current ownership.

My guess is this would have little effect on the outward view of the hotel. Creditors would just keep Westin on site and the day to day of the hotel wouldn't change. Meanwhile they would be looking to unload the property to someone new. With Covid coming to an end and people anxious to get back out into the world I'd imagine it wouldn't take long to find a new owner to take over.

An operating hotel with management in place has a lot more value than a shuttered hotel, the creditors would be foolish to interrupt service if they do take possession.

It may be more complicated then that,they put it together with a bunch of bridge loans with multiple institutions involved,the bank may be just representing multiple people that do not have the leeway.

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Originally Posted by K-slice

Sounds like the bank is more interested in getting their hand on the asset rather then working with current ownership.

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Yeah this is how I feel, they want the hotel and this is a rare opportunity to take it. Which is totally unfair to the owner.

savethebookcadillac.org part deux!

Ferchill merely continues the storied tradition of owners sinking money into a Book Cadillac renovation, then losing their shirts.

I too remember [[former Michigan Building owner) the late Tony Pieroni talking about how crazy the patchwork of money pots [[no Irish pun intended) used to get the $180 million development together... both private and public money and historic tax credits. He mentioned that this was the most complex financing he had ever seen, and that it was destined to fail eventually.

I wonder if Dan Gilbert would be interested in adding this to his property portfolio... now that he is awash in cash. I would prefer someone else... but we've already seen what a nightmare the Penobscot owner was like.

Horrible!!! does that mean that the hotel is closing down again!!!

I don't know if this is a solution, but all of the major and/or 5-star hotel brands are in the habit of buying-out other hotels' properties and re-badging them.

So, maybe someone with more money that the owner of the Book Cadillac [[Hilton, Accor, Marriott, etc) might buy up the property.

Having said that, COVID-19's decimating effect on travel and tourism comes into play in all of this... so maybe make it a Downtown Condo-only building, with no hotel/business except ground floor retail shops?

Isn't that what's happening further along the street at the Book Tower?

Fernando Palazuelo sure failed to live up to his promise in Detroit...

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Originally Posted by night-timer

I don't know if this is a solution, but all of the major and/or 5-star hotel brands are in the habit of buying-out other hotels' properties and re-badging them.

So, maybe someone with more money that the owner of the Book Cadillac [[Hilton, Accor, Marriott, etc) might buy up the property.

Having said that, COVID-19's decimating effect on travel and tourism comes into play in all of this... so maybe make it a Downtown Condo-only building, with no hotel/business except ground floor retail shops?

Isn't that what's happening further along the street at the Book Tower?

Fernando Palazuelo sure failed to live up to his promise in Detroit...

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Your solution to a fine hotel is to double the mortgage by ripping apart all those new hotel rooms and constructing condos? Someone will buy it but it won't be a hotel chain. Last thing operators need to get back on their feet after the pandemic is to buy properties.

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Originally Posted by Danny

Horrible!!! does that mean that the hotel is closing down again!!!

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No; in fact, quite the opposite. Supposedly one reason the bank doesn't want to work with the building owner on new lending terms is because the building has become such a valuable asset. I.e., the bank seems to think that they can make a lot more money by seizing the asset and selling it to someone else [[presumably at a much higher price than the current mortgage).

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Originally Posted by night-timer

I don't know if this is a solution, but all of the major and/or 5-star hotel brands are in the habit of buying-out other hotels' properties and re-badging them.

So, maybe someone with more money that the owner of the Book Cadillac [[Hilton, Accor, Marriott, etc) might buy up the property.

Having said that, COVID-19's decimating effect on travel and tourism comes into play in all of this... so maybe make it a Downtown Condo-only building, with no hotel/business except ground floor retail shops?

Isn't that what's happening further along the street at the Book Tower?

Fernando Palazuelo sure failed to live up to his promise in Detroit...

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Palazuelo has nothing to do with this property; what on earth are you talking about?

And no, Book Building renovations do not involve gutting a newly-remodeled hotel and adding in condos. That would be an insane waste of money.

The Book Building/Tower were only ever commercial and office space in the past. No hotel was ever in that complex.

Not worthy of a separate thread but according to Crain's the Roberts Riverwalk Hotel received a bid of 15 million at auction. It was listed for sale at 26 million last year but didn't sell. No word on the buyer, who still has 48 hours to make a substantial down payment.

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Originally Posted by Gistok

OK... the top 8 floors of the 33 story building are 65 luxury condo's. So the building is worth more than just the hotel portion.

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The building is worth what someone would pay for it on the open market. If all of those condos are already sold, that portion of the building has, relatively, little to no value in regards to the building itself, as that portion of the building isn't an asset of the building anymore.

It's also entirely possible that you can have a relatively worthless hotel sitting under very valuable condo real estate. In that case, you convert hotel floors into more condos. This happens in NYC all of the time, old run-down hotels with some private living spaces get converted into luxury apartments.

^^ Um... you're readying WAY more into my comment that what I said. All I said is that "the building is MORE than just the hotel."

What becomes of either is just speculation, which I never made in my comments.

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Originally Posted by 401don

Not worthy of a separate thread but according to Crain's the Roberts Riverwalk Hotel received a bid of 15 million at auction. It was listed for sale at 26 million last year but didn't sell. No word on the buyer, who still has 48 hours to make a substantial down payment.

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The Riverwalk Hotel [[the old Parke Davis plant to us ancients) was a property in real distress. Even 4 years ago when some family members of mine stayed there the place was a mostly empty, dirty, and under-maintained mess. It's located too far from downtown and local points of interest to generate enough traffic outside of peak periods.

However, for this to happen to the far better located and funded Book Cadillac is quite a shock. Although it does sound like it very well could be that the hotel's creditors are using the Covid-19 distress that has hit the entire tourism industry to pry a potentially valuable hotel and condo building loose from its owner.

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Originally Posted by EastsideAl

The Riverwalk Hotel [[the old Parke Davis plant to us ancients) was a property in real distress. Even 4 years ago when some family members of mine stayed there the place was a mostly empty, dirty, and under-maintained mess. It's located too far from downtown and local points of interest to generate enough traffic outside of peak periods.

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It doesn't help that road leading down to the hotel looks and feels like it's been through a couple of wars. I don't understand why the City can't find a few bucks to repave it and give things guy a break. The view is great, with the river, Belle Isle, and Canada. It's almost as if the City wants him to fail.

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Originally Posted by Honky Tonk

It doesn't help that road leading down to the hotel looks and feels like it's been through a couple of wars. I don't understand why the City can't find a few bucks to repave it and give things guy a break. The view is great, with the river, Belle Isle, and Canada. It's almost as if the City wants him to fail.

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This building is one of the most historically significant in Detroit - the Parke Davis Research Lab. My grandfather worked here during his college summer recess. He still speaks with reverence about his time there.

The Roberts Riverwalk hotel is a fleabag, not worthy of saving. The last remodel ruined the historical character of the building. National Park employees recommended that it be withdrawn from the National Register of Historic Places.

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Originally Posted by enio

This building is one of the most historically significant in Detroit - the Parke Davis Research Lab. My grandfather worked here during his college summer recess. He still speaks with reverence about his time there.
The Roberts Riverwalk hotel is a fleabag, not worthy of saving. The last remodel ruined the historical character of the building. National Park employees recommended that it be withdrawn from the National Register of Historic Places.

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Most of the poor condition is cosmetic. The rooms are large with high ceilings. I think the location would be ideal for a seniors home, which was the plan for part or all of it previously. Seniors would have nice views from the rooms and could sit along the riverfront. They did install an outdoor pool, which the hotel location really needed. Not sure how much the seniors would use it but maybe some staff parties?:o