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Glen Allen hotel sinks toward foreclosure

David Larter February 5, 2013 1
The Richmond Marriott West on Dominion Boulevard in Glen Allen. (Photo by Michael Schwartz)

The Richmond Marriott West on Dominion Boulevard in Glen Allen. (Photo by Michael Schwartz)

An Innsbrook hotel, deep underwater, is heading toward foreclosure.

The owner of the Richmond Marriott West on Dominion Boulevard in Glen Allen has fallen behind on its loan payments and the value of the property plummeted since the recession, according to Trepp, a real estate tracking firm that monitors commercial mortgage-backed securities.

The 242-room hotel is owned by Kentucky-based Columbia Sussex Corp., which bought the property in 2005. The property was built in 2001 and sits across from Wells Fargo’s large Glen Allen corporate campus.

According to Trepp, the hotel is underwater and not generating enough revenue to cover the payments on its original $31.4 million loan, originated by Wachovia. Henrico County most recently assessed the property at $19.8 million.

Columbia Sussex still owed $28.3 million on its loan, according to Trepp, and the company began to fall behind in October 2012.

Special servicer C.W. Capital Asset Management is moving the Marriott property towards the auction block while it negotiates with Columbia on loan modifications, according to Trepp.

Columbia Sussex CFO Derek Haught declined to comment on the status of the Marriott property.

Records show that the value of the hotel was $28.3 million in 2008 and bottomed out at $16.7 million in 2011.

Columbia Sussex recently unloaded another of its Richmond hotel properties.

In December, it sold the Crown Plaza West on West Broad Street to a buyer in Portland, Ore., for $2.5 million. That was the company’s only other property in Richmond, according to its website.

The Marriott hotel averaged 58 percent occupancy last year, up 3 percent from 2011 and up 6 percent from 2012. When Columbia purchased the property in 2005, occupancy was about 69 percent.

At the time, the private appraisal of the hotel was about $211,000 per room. Today it stands at $85,950, the Trepp report shows.

Other hotels in the Innsbrook area have dropped in value since 2008 as well.

The 125-room Comfort Suites off Cox Road, built in 1998, has seen its assessed value decline to $4.1 million last year from $9 million in 2007. The assessment of the 136-room Hampton Inn on West Broad Street, built in 1994, dropped to $5.8 million last year from $10.1 million in 2008.

Sidney Gunst, the developer of the Innsbrook Shoppes retail center and one of the original developers of the office park, said that hospitality in the area was hit hard during the recession but that it’s improving.

“It’s coming back, but it’s coming back in an uneven fashion,” Gunst said. “And it’s certainly not anywhere close to where it was before the downturn.”

At least three other hotels in Henrico County have gotten into trouble in recent months.

The Chesapeake-based owners of the Aloft hotel at West Broad Village were sued by their lender last year after they stopped making payments. Shamin Hotels eventually bought the property.

The Days Inn near West Broad and Dickens Road – next to Genworth Financial – was foreclosed on in December.

And the loan on the Embassy Suites near West Broad Street and Glenside Drive is slated to go to a special servicer in April.

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One Comment »

  1. Crafty February 5, 2013 at 8:41 am - Reply

    I am not sure that anyone would be surprised that hotels in our city continue to be running in the red. They are built with little thought to where the patrons will actually be coming from. If a destination hotel close to the highway like the Embassy Suites is going belly up, I can’t imagine that lesser hotels with fewer amenities not even near the highway would be fairing worse. Building a hotel across from a corporate center is not, in my estimation, a good business plan as if the company chooses to relocate or itself fails, you are left without an audience. Seems pretty obvious to me.

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