Posted on: July 15 2010 | Posted in: Latest NewsPrivate investors make funds available. Construction to begin this week.
July 12, 2010
Jennifer Larino, Staff Writer
Officials with the Hyatt Regency New Orleans next to the Superdome said Monday that the hotel’s owners will use $270 million in traditional loans to redevelop the hotel, meaning it won’t use the $225 million in Gulf Opportunity Zone bonds they obtained after the 2005 hurricane season.
Poydras Properties Hotel Holdings did not disclose the names of its investors. Its financing breakthrough is a stark contrast from the company’s position late last year when it could not find interest in the recession-battered bond market for the tax-exempt GO Zone bonds.
As of October, the company had only sold $22.5 million bonds, which the Louisiana Bond Commission had approved for the project in November 2008.
“It could have been the worst environment in history to sell bonds, but our ownership had tenacity and they kept looking and seeking the right deal,” said Michael Smith, Hyatt Regency general manager.
Most projects in the New Orleans that used GO Zone financing were built within a two or three years of the 2005 storm season, which saw hurricanes Katrina and Rita ravage south Louisiana. Those that were built using the storm recovery incentive include the Domain Cos. apartment projects along Tulane Avenue, Robert’s Fresh Market locations in Lakeview and on Carrollton Avenue and an office building for the Shaw Group in Baton Rouge.
Developers of New Orleans-based projects were seldom successful in finding investors for GO Zone bonds. Of the more than 40 that applied for bond allocation after the storm, fewer than 10 were able to sell them on the open market. This led critics to argue that the bonds were being used in areas that saw little impact from the 2005 hurricanes, but those in the investment arena countered that investors are still skittish about putting money into New Orleans, even with the tax breaks as an incentive.
Smith said financing for the Hyatt Regency came together on July 2 as a result of persistence on the side of ownership and a vote of confidence from investors who saw the hotel’s revenue potential. It is scheduled to open in fall 2011, well in time to accommodate sporting events such as the NCAA Men’s Final Four in 2012 and the 2013 Super Bowl.
Construction on the wind and flood damaged hotel shuttered since Hurricane Katrina began on Monday.
Poydras Properties aims to rebrand the Hyatt Regency, which links to the Louisiana Superdome via the former New Orleans Centre, as a venue for small conferences. After redevelopment, the hotel’s 200,000 square feet of meeting and exhibit space will include two 25,000-square-foot ballrooms and 60 banquet and meeting rooms.
The hotel will also house two restaurants, a sports bar and atrium bar and a 24-hour convenience store.â€¢