Reopening of Hyatt may be put on hold

July 13 2009 | Latest News
Company cannot find buyer for bonds

Sunday, July 12, 2009
By Jaquetta White, Times Picayune

Business writer

An official with Poydras Properties LLC, the company that owns the Hyatt Regency New Orleans Hotel, said this week that plans to reopen the massive downtown property will be put on hold if the company cannot find buyers for the more than $225 million in Gulf Opportunity Zone bonds planned as financing.

Christopher Robertson, managing partner of the firm that bought the hotel in December 2007 for $32 million, said the company plans to ask the state to back the bonds with a $60 million to $80 million loan to coax the recession-impacted bond market into investing in the rebuilding of what was once the city's third-largest hotel.

So far, Poydras Properties has done $23 million in preliminary construction work on the Hyatt, which has not reopened since being damaged in Hurricane Katrina. The hotel has a new roof, its exterior skin has been repaired and it has been remediated and gutted. The company also has commissioned architectural and interior design drafts, Robertson said. A construction permit is in hand, but construction is stalled.

"We're at a point that we can't do any more without financing," Robertson said. "Construction is conditioned on financing. That's where we're stymied right now."

The State Bond Commission approved $225 million in low-cost GO-Zone bonds to Poydras Properties in February. The bond program is designed to entice new business to and help rebuild areas of the city damaged by Hurricanes Katrina and Rita. At the time of the approval, there was concern that the company would not be able to sell the bonds because of economic conditions and depressed travel.

Nearly five months later, the company has not been able to make a bond sale.

"There's been somewhat of a misunderstanding of the marketplace that by virtue of the fact that we've been authorized to issue GO-Zone bonds that we've been able to sell them," Robertson said. "But currently, the market is not liquid enough. . . . We've been struggling."

Were the company to find a buyer, the transaction would take six to nine weeks and construction could be completed in 18 months, Robertson said.

The Hyatt received substantial water damage in Katrina. Every window on the Poydras Street side of the hotel was blown out in the 2005 storm, and the hotel became an immediate representation of the storm's tremendous damage.

But, even before the storm, the hotel -- attached to what was the New Orleans Centre mall and Louisiana Superdome -- struggled because of its distance to the French Quarter and Ernest N. Morial Convention Center-New Orleans. The previous owners, Strategic Hotels & Resorts, performed renovations on the site after the storm and had proposed it as the centerpiece of a jazz district. That plan fell through.

Robertson said construction plans call for adding 226,000 square feet of meeting space to the hotel and reopening it with 1,193 rooms, the same number it had before the storm. Construction, were it to be financed, could be completed within 18 months and would produce 500 jobs. The completed hotel would employ about 600 people, Robertson said.

"This is a hotel that is significantly important to the Superdome complex," Robertson said.

Robertson said his company plans to ask the state to help it sell its bonds by backing them with a $60 million to $80 million loan. Company officials met unofficially with representatives from the state earlier this year but are hoping to have more significant meetings in the next three weeks. Poydras Properties will argue that the hotel is a major revenue generator for the state. According to a study commissioned by the firm, the hotel could have a total economic impact of $112.2 million on the regional economy in its first full year of operation.

"It's a significant economic generator for the state. That's the opportunity we see that the state will hopefully recognize," Robertson said.

If the state is unable to provide such backing and a bond buyer does not appear in the next 60 days, Robertson said his company will have to put the brakes on the project -- for years perhaps, as the bond market recovers.

"We'd just put it on the shelf. It's not that it's not a good investment," Robertson said. "There's really not much to do until we get financing."

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Jaquetta White can be reached at or 504.826.3494.