When the 300-room Renaissance Hotel on the north end of Colorado Springs goes to foreclosure auction in October, will anyone bid on it?
Less than a year ago, investors were interested in taking over the project, near Interstate 25 and Interquest Parkway, but some watching the deal today say the bidding price, expected to start around $30 million, will be too steep for most companies that previously expressed an interest in it.
Marriott hotels had a first right of refusal in the litigation against Hammons and withdrew its interest, according to court records.
JD Holdings, which merged with John Q. Hammons Acquisitions in 2005, had maintained an interest. But the court ruled JD Holdings will have no more rights than any other bidder in the foreclosure proceedings.
Denver-based hotel and real estate consultant Robert Benton believes the Hammons company might be one company with pockets deep enough to bid on the project, but he even questions whether the $30 million price tag will appeal to them.
If no one bids on the project, Flintco, the Oklahoma-based construction company that won foreclosure judgment on the hotel June 16, won’t get paid.
Flintco sunk millions of dollars into project and filed a $24.55 million lien on the property in March 2010.
The foreclosure judgment was in the amount of $27.4 million plus interest and a per-day assessment of $4,575.81, which will amount to more than $30 million by the auction date of Oct. 20, though Hammons may also pay down the balance according to a separate settlement.
Benton believes Flintco will be hard-pressed to get that kind of money from a foreclosure sale in today’s depressed real estate markte and said he’d be surprised if there is much interest in the property at a starting bid of $30 million.
At that price, with 300 rooms, the cost per room is roughly $96,000, Benton said, adding that there will be a lot of costs for further development.
With 30 percent of the hotel remaining to be completed and two years of sitting empty with no activity, it will take a big chunk of cash to get the hotel operational, he said.
“There’s a lot of uncertainty there,” he said. “When there’s uncertainty about what you’re going to be surrounded by and when it’s going to be finished, it brings down the market value.”
“If it were me, $125,000 to $150,000 a key is what I would want to pay in that market,” Benton said. “Colorado Springs is not a strong hotel market.
The arrested development of the 11-story, 300-suite hotel and adjacent 50,000-square-foot conference center is about 70 percent complete, said Nor’wood Development Vice President Fred Veitch.
Nor’wood is developing the 135-acre InterQuest Marketplace retail center near the hotel site.
The area was expected to be home to a large retail center, indoor water park, restaurants and entertainment venues. While there has been some building there, most of that development is also on hold. Veitch said a gas station is currently going through the planning and permitting stages.
Despite the hurdles, John Q. Hammons Senior Vice President and General Counsel Justin Harris, believes the project will be completed and eventually thrive — but would not say whether the Hammons company will bid on it.
Harris said he believes it would take nine to 12 months to complete construction on the property, including time to reactivate building permits, finish the interior infrastructure and design and hire and train employees.
“It was designed not just as a Renaissance but as a John Q. Hammons Renaissance and I think most people would agree that’s something of value and it may be better served to remain a John Q. Hammons property,” Harris said. “But the building itself could certainly be rebranded. I don’t think that’s a hindrance to most potential investors.”
He said that if Hammons’ company were to finish the project, it would finish the hotel as it was originally intended — as a John Q. Hammons Renaissance.
The hotel is still listed on the Marriott web site with an expected opening date of January 2015, but Marriott did not respond to calls or e-mail questions about its plans.
“I feel very strongly that that hotel project will be finished and opened by someone,” Harris said. “There are other people interested in the project and we also have a lot invested in it.”
Someone might be interested in the hotel, but Benton isn’t sure who might pay $30 million.
“Whoever is going to buy that is going to be someone looking for a bargain,” he said, “and at that price, I don’t know that it’s a bargain.”