| Appleton development expected to move ahead despite Paper Valley default The default of a $27 million balloon mortgage payment by the owner of the Radisson Paper Valley Hotel in Appleton will not derail plans for a downtown exhibition center, Mayor Tim Hanna said Friday. He said his company had a five-year loan on the properties and had hoped the valuation of the two hotels would climb in that time, but it didn't. "No one is lending 85 percent loan to value," Langley said. Langley said the payment was due in November. 4 million for the plan. "This is a $20 million asset which will be leased to them for a dollar and generate thousands of extra space nights," Hanna said. Appleton Alderman Jeff Jirschele said the receivership process may benefit the hotel in the long term. "It's automatic to say that terrible things are happening, but this may be a prudent step to bring about some restructuring," he said. Langley said the Appleton and Neenah hotels are profitable, together generating about $17 million in annual revenues. Montclair Hotel Investors lambasted the immediate appointment of a receiver in a memo filed in court this week. Montclair is concerned about how employee benefits will be handled during the transition, how liquor licenses will be transferred and the impact on the proposed expo center. "If the cost of running the place is really high relative to the revenue it brings in, the receiver could decide to do that," Jacobsen said. Jacobsen recognizes how the uncertainty can rattle a community. Dennis Langley, a partner in the investment group, said the hotels will operate normally for now, along with their 365 employees will keep their jobs. That includes weddings and the Paper Valley's ongoing contract to host NFL teams that are playing against the Green Bay Packers. The hotels will operate under a receivership, a court-appointed manager who handles the business until a decision is made on its future. For months, the city and a board of developers had been working to hash out a memorandum of understanding with Montclair and the managers of the Paper Valley. An Outagamie County judge agreed to slow the receivership process Friday, which means it could take two to seven months to complete, Langley said. He quotations the hotels combined are worth between $18 million and $24 million, with the Paper Valley valued at $15 million. He ordered Hostmark to spend a couple days examining the properties to determine how it would transfer management and present an analysis to the court next week. The default by Illinois-based Montclair Hotel Investors, which owns and operates the Radisson and the Holiday Inn Neenah Riverwalk, was announced Friday in an exclusive interview with Gannett Wisconsin Media. "It's always unnerving when something like this is announced, but I do not see any reason to panic or be concerned," he said. In the worst-case scenario, however, Jacobsen said the receiver would close the Paper Valley and Riverwalk hotels until the properties are sold. A delay could add costs to the exhibition center project and push back room tax initiatives in several communities in the Fox River Valley, Rugland said. "The property makes a lot of good sense for a future purchaser. At a hearing Friday afternoon in Outagamie County Circuit Court, the Florida-based lending company LNR Partners, part of LNR Property, a real estate investment and finance management company, proposed Montclair pay what it owes, cover the lender's attorney fees and sell property to satisfy the amount due, according to a complaint filed May 1. The lender doesn't want to take over ownership of the hotels and filed a motion to appoint a receiver, who would bring in Hostmark Hospitality Group, based in Schaumburg, Ill. The lender's attorney proposed that the receiver take over immediately. Appleton development expected to move ahead despite Paper Valley default |
Sunday, 3 June 2012
Appleton development expected to move ahead despite Paper Valley default
