Sale of Dearborn Hyatt Hotel May Fail

[DetroitDad]

$12.5M sale of Dearborn Hyatt may fail

Louis Aguilar The Detroit News / The Detroit News
The $12.5 million sale of the Hyatt Regency Dearborn is in jeopardy.
New owner Goral Vision didn't pay up and missed the Sept. 14 closing date of the sale, according to court documents filed today in U.S. District Court in Detroit by the hotel's court-appointed receiver, Capital Hotel Management. Capital Hotel is seeking to keep the $2 million deposit by Goral Vision, which has a Montreal, Quebec business address, and officially cancel the deal.

The 772-room hotel at 600 Town Center Drive had been on the market for months, after the real estate investment trust Ashford Hospitality Trust Inc, defaulted on its $32.5 million loan on the hotel last year. In 2007, the 34-year-old hotel was sold to Ashford for $40 million.

From The Detroit News: http://detnews.com/article/20101020/...#ixzz12xe4OD00

Links to similar stories:

• Ashford Hospitality Trust Inc. puts Dearborn Hyatt into receivership
• Dearborn loses Ritz-Carlton
• Residents evicted from Southfield hotel after landlords fail to pay $113,000 water bill
• Novi’s Hilton Garden Inn to be sold for $16.2 million to Virginia firm
• Detroit hotels Hilton, Omni in distress
• Omni and Hilton discussion
• Former Pontchartrain Hotel Shuttered
• Pontchartrain Hotel owner checks out, owing $1M to state
• Metro Detroit's hotel occupancy rate has declined faster than any other city in America
• Greektown Hotel & Casino out of bankruptcy

[CLAUDE G]

Thats a steal for 12.5 million. Its a beautifull Hotel!

[Packman41]

You may think it is a "steal" but that hotel was professionally marketed across the country and that was the best price they could get for it. Now the potential buyer appears to be having second thoughts about what a "steal" it is.

This should tell you plenty about how the real estate market in the area [[and hotels in particular)is/are viewed by savvy investors. You did see that the Omni hotel just shut it's doors last week without finding a buyer? One thing worse than a low price is no price.

[canuck]

Yup, I think a bed and breakfast might be a little less risky than investing in a 772 room hotel. That's a lot of paint and wallpaper, a lot of overhead, no nickle and diming here.

[mwilbert]

In a recession, the hotel business is a bad business. The marginal cost of renting out a room when you aren't full is close to zero, so if there is any competition you have very little pricing power. The Hyatt was a pretty spiffy hotel when it opened 30+ years ago, but it isn't anything special now, so it is pretty much in the generic mid-range hotel space.

However, if someone thought it was worth $12.5 million, it is probably still worth something. You could probably mothball one wing.

[DetroitDad]

Thats a steal for 12.5 million. Its a beautifull Hotel!

No kidding, compared to the 2007 price of 40 million.

[Packman41]

No kidding, compared to the 2007 price of 40 million.

Ever more no-kidding when the listing broker said in a Crain's Detroit article that the replacement cost would be $150 million.

And remember the nearby Ritz Carlton [[now called "the Henry") was sold for only $3.0 million. As quoted in Crains:

"When the hotel last changed hands, in 1998, its sale price was $64.8 million, still far less than the estimated $100 million it would cost to replace the property.

A group of investors from Houston pooled $3 million and purchased the hotel in April with Denver-based Greenwood Hospitality Group When the hotel last changed hands, in 1998, its sale price was $64.8 million, still far less than the estimated $100 million it would cost to replace the property.

A group of investors from Houston pooled $3 million and purchased the hotel in April with Denver-based Greenwood Hospitality Group."

[CLAUDE G]

Funney thing, I booked a room there on Hotwire for $59 several weeks ago.

They must be hurting if they are renting rooms out on Hotwire for $59.

[Lowell]

Very distrubing news. What's the next domino? Fairlane Shopping Center?

Linked Thread: Not so Ritz-ie. Dearborn's former Ritz Carlton sold for $3mil

[Gistok]

Maybe the more recent price of only $3 million for the newer Ritz-Carlton scared off the investors in the Dearborn Hyatt sale??

[fastcarsandfreedom]

The Hyatt is a great property with great potential, excellent visbility and good proximity to Ford, etc. The hotel business is tough at the best of times, and we're in a bad economy in an overbuilt market. There was a lack of balance in the overall market with 1600+ rooms coming online downtown and at the same time a precipitous drop in business and conference trade--Hyatt's bread-and-butter chainwide.

There was much gnashing of teeth over the Ritz-Carlton--in fact Marriott flagged it as part of the new Autograph chain--and it seems to be doing quite well...and I'm confident the Hyatt will prosper in the future--the entire area, Fairlane Town Center included is still viable--no one is lending $ for hospitality right now, which is making these transactions next to impossible to get done [[look at the Ponch)

[Downrivergal]

As teens, when we got bored at Fairlane, we would hop on the monorail for a quick jaunt over to the Hyatt. My friends and I would ride the elevators up and down, jumping up and down at certain times to try and achieve zero gravity. We would leave when the staff got testy.