Tuesday, November 24, 2009

Chase Park Plaza Hotel Falls Behind in Rent

From STLtoday.com: "The downtown Renaissance isn’t the only St. Louis hotel that’s struggling financially. The majority owner of the Chase Park Plaza disclosed today that the operator of that landmark hotel is $5 million behind on its rent.

The disclosure comes in a conference call script attached to a quarterly financial filing for Behringer Harvard Opportunity REIT I, which is based in Addison, Texas. The real estate investment trust bought majority ownership of the Chase Park Plaza in 2006. In the script, chief accounting officer Bryan Sinclair says:

We lease the Chase Park Plaza hotel and its operations to our five percent partner in the investment, and due to the challenges faced by the hospitality industry, this partner has been unable to meet its full lease obligation to us. Accordingly, in the third quarter, we recognized a five million-dollar reserve for the unpaid rent balance. In addition, we reserved five million dollars for straight-line rent adjustments due to requirements — under GAAP — that rents are to be recorded evenly over the entire term of the lease.

The company has previously been optimistic about the part of the Chase Park Plaza that’s being converted to condominiums. In today’s filing, chief operating officer Sam Gillespie says the REIT expects to use $25 million in tax credits to “significantly reduce” a $108 million loan against the property."