In the second report in as many weeks of a Downtown hotel being auctioned, U.S. Bank has filed a public notice with the Circuit Court that it will sell the property occupied by the Hyatt Downtown in a public auction Jan. 11.
The 963-room waterfront Hyatt is the largest Downtown hotel and the newest built along the St. Johns River.
It was a critical property for Jacksonville to host the 2005 Super Bowl. The hotel, then the Adam’s Mark Hotel, served as NFL headquarters for the event.
In a statement Saturday, Hyatt General Manager Dan King said the Northbank hotel continues its day-to-day operations and has a long-term agreement to operate the property.
“We understand from Chartres Lodging, owner of Hyatt Regency Jacksonville, that it is working with its lender concerning its mortgage loan,” he said.
“Through this period, the Hyatt Regency Jacksonville is continuing all its usual day-to-day operations for guests and employees, accepting guests and holding meetings,” he said.
“Hyatt has a long-term agreement to operate the hotel, and we do not foresee any changes to that agreement. We look forward to welcoming guests and hosting successful events here in Jacksonville for years to come,” King concluded.
King did not provide the length of the long-term agreement.
U.S. Bank, as trustee, filed the notice of sale for the Hyatt hotel property on Aug. 31 pursuant to a summary final judgment in an action against Oxford Jacksonville Riverfront Hotel LLC and Kingdom Builders Construction Group Inc., a dissolved Florida corporation.
Attorney James Riley with Rogers Towers is listed in the public notice as the plaintiff’s attorney.
Riley said Sunday that on Nov. 3, his client, Capital Management Asset Management LLC, in its capacity as special servicer for the lender, filed a verified complaint to foreclose its mortgage and security agreement on the property owned by Oxford Jacksonville Riverfront Hotel LLC, known as the Hyatt Regency Jacksonville Riverfront Hotel.
He said the loan went into default by virtue of the borrower’s failure to make the scheduled debt service payments beginning in July 2010.
He said that on April 13, Circuit Judge Charles Mitchell entered an order appointing Chad Crandall of Capital Hotel Management LLC as the receiver for the hotel.
“Crandall is the president and co-founder of CHM and is very distinguished and respected in the resort hotel industry,” he said.
Riley said the court entered a summary final judgment of foreclosure on Aug. 30 and scheduled the foreclosure sale for Jan. 11.
He said the judgment amount was for $195.46 million.
Riley said he was not at liberty to discuss any negotiations between Oxford and his client nor could he discuss the Hyatt management contract.
“I can tell you that from my perspective, everyone is very pleased with the operation of the hotel and that it has been in very good hands,” Riley said.
The 18-story Hyatt property, at 225 E. Coastline Drive and 122 S. Newnan St., is described in county records as a full-service hotel built in 2001. Its website says it has 963 newly renovated guestrooms, although a fact sheet on the site also states its original count of 966 rooms.
The hotel was built in 2001 as an Adam’s Mark Hotel. The Newnan Street structure initially was a City building, called the Daniel Building, developed earlier. Records show it was built in 1978.
Both properties were sold in 1999 for the initial Adam’s Mark construction.
The Adam’s Mark opened in February 2001 with a public incentive package worth more than $21 million, and was the National Football League’s headquarters during Super Bowl XXXIX in February 2005, according to published reports.
Oxford Jacksonville Riverfront Hotel bought the hotel property March 30, 2005, according to Duval County property records. The 2005 sales price for both buildings was $67 million.
The Coastline Drive hotel building has a 2010 taxable value of $43.3 million and the Newnan Street structure, used for meetings and conference space, was valued at $3.98 million.
State corporate records show that Oxford Jacksonville Riverfront Hotel LLC is based in San Francisco. Its managing member is Jacksonville Waterfront Mezz, also based in San Francisco. It shares a corporate address with Chartres Lodging Group LLC.
The public notice of sale filed in Circuit Court states that the plaintiff is U.S. Bank, N.A., as trustee and as successor-in-interest to Bank of America, N.A., as trustee for the registered holders of J.P. Morgan Chase Commercial Mortgage Securities Corp., Commercial Mortgage Pass-through Certificates, Series 2007-LDP11.
The notice said that pursuant to the summary judgment, U.S. Bank will sell the property for cash to the highest and best bidder at 11 a.m. Jan. 11 at www.duval.realforeclose.com.
The website is used by the Duval County Clerk of Courts for online auctions. According to the site, foreclosure sales are now conducted entirely online and it is no longer necessary for bidders to appear in person to participate in the sale.
Bidders must register on the site for a username and password and place a valid deposit for their bids to be considered.
In the public notice, the property is described in detail and includes the hotel parcel, which is the former City Hall Annex parking lot; the Daniel Building parcel; and various easements.
The notice also said equipment and personal property, such as furniture, furnishings, art objects, tools, supplies, appliances and other items owned by the debtor are part of the auction.
A year ago, The Wall Street Journal reported that the Downtown Hyatt was delinquent on its mortgage and that the ownership group, Chartres Lodging Group LLC, was negotiating with the lender.
It reported that Chartres owns the Hyatt Regency in Jacksonville with two other ownership groups.
The Journal reported that Hyatt Hotels Corp. extended $5 million to the ownership group in 2009 to help keep the mortgage current and Chartres agreed to extend the contract for Hyatt to manage the hotel, but the money was exhausted by July 2010.
The hotel’s occupancy fell to 52 percent in 2009 from 61 percent in 2008 and its net cash flow fell to $4.2 million in 2009 from $10.9 million in 2008, the Journal said.
King said at the time that the hotel would continue day-to-day activities.
“The Hyatt has a long-term agreement to operate this hotel and we’re committed to Jacksonville,” he said.
The hotel changed brands from Adams Mark to the Hyatt in 2005. The Daily Record reported that the hotel was then completely renovated and all that remained of the previous décor was the marble floor in the lobby.
By 2008, new owners had invested more than $25 million in the hotel, King said then.
“When Hyatt took over the property, we renovated every guest room and the lobby,” said King.
Also renovated were the fitness center, the meeting rooms and other public areas.
The 17th floor of the hotel is the Concierge Level and Regency Club, a private lounge and business center.
In another hotel announcement last week, California-based Auction.com announced it would sell more than 325 nonperforming notes and commercial real estate owned properties in the Southeast, including the 322-room Wyndham Jacksonville Riverwalk Hotel, with a starting bid of $5.25 million, and the 120-room Days Inn along Cagle Road, starting at $250,000. The auction runs Sept. 19-Oct. 6.
The Wyndham was developed in 1980 along the Southbank of the St. Johns River as a Sheraton, rebranded as a Radisson and converted to a Wyndham in 2006, and the Days Inn was built in 1971.
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