By Greg LaRose, New Orleans CityBusiness
NEW ORLEANS â€” A flurry of hotel transactions in the New Orleans market continues, with a large French Quarter hotel and a boutique property selling within the past month.
The Astor Crowne Plaza Hotel at Canal and Bourbon streets and the Royal St. Charles Hotel on St. Charles Avenue were sold within the last month.
The sale of the Astor Crowne Plaza wasn't the typical transaction between real estate investors that marked much of 2013, when more than a dozen hotels in the New Orleans area changed ownership. It was sold in early December to Starwood Capital Group, a Greenwich, Conn. investment management company.
While the 697-room property sold for $77 million according to conveyance records, the deal is believed to have a total value of more than $116 million when including debt that burdened previous owners.
The seller, LNR Partners of Miami Beach, Fla., is a special servicer that specializes in dealing with defaulted mortgage loans.
The Astor Crowne Plaza's financial troubles started in 2005 after then-owner Decatur Hotels undertook a sweeping renovation of the property. It paid for the work with a commercial mortgage-backed security â€” essentially a loan secured with the property's original mortgage â€” from RBS Greenwich Capital Markets. After high post-Katrina occupancy rates dwindled, the ownership fell behind on its loan, and the lender foreclosed on the property.
A partnership with owners from San Francisco and New York bought the hotel for $93 million in 2007. It caught up on the mortgage payments but encountered difficulties when the national recession, an $11 million renovation in 2009 and the 2010 BP oil spill limited room revenue.
LNR Partners has serviced the loan since 2009 and planned to auction the hotel in August 2012 at a reserve price of $105 million. That sale never took place and the property stayed off the market until last August, when it was expected to fetch more than $120 million.
Representatives from LNR Partners wouldn't offer additional details on the transaction, and Starwood Capital Group did not respond to interview requests.
The Astor Crown Plaza consists of two hotels: the 502-room Astor tower that Decatur Hotels built in 2002; and the Alexa tower, built in 1900 with 191 rooms.
Lowe Enterprises Investors announced Monday morning it has acquired the Royal St. Charles Hotel on behalf of an unidentified investment client. The seller, Jon Kline of Newport Beach, Calif., also owns the Renaissance Arts and Renaissance Pere Marquette hotels in New Orleans.
Records from the New Orleans Notarial Archives show the hotel sold Dec. 31 for $10.1 million, including the assumption of an $8.7 million loan from U.S. Bank.
With its purchase of the Royal St. Charles Hotel, LEI owns 47 hotels and resorts in 17 states and Washington, D.C. Its management affiliate, Destination Hotels & Resorts, has assumed control of the hotel and lists it on its website.
The 143-room Royal St. Charles Hotel was originally the home of Southern Savings Bank, an institution founded in 1887 that failed in 1990 and merged with Gulf Coast Bank and Trust in 1991.
The property was converted into a hotel in 2000 in a project that preserved the original bank vault. The most recent renovation of the 10-story building was in October 2012, when $2 million was spent on upgrades. The hotel includes approximately 2,610 square feet of meeting space and a PJ's Coffee & CafÃ© on the ground floor.
Online records from the Orleans Parish Assessor's office show the hotel last changed hands in February 2011, when local developer Warren Reuther sold it to Kline's investment group, Clearview Hotel Capital, for $8.3 million.
Its original owners were Dr. A.J. Faucheaux and Alvin Swanner.