ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, May 7, 1996 TAG: 9605070044
SECTION: BUSINESS PAGE: C-8 EDITION: METRO
SOURCE: JEFF STURGEON STAFF WRITER
Owners of the Patrick Henry Hotel in downtown Roanoke said Monday they were negotiating to avoid a July 17 foreclosure sale, in which the federal government could auction the property for nonpayment of a loan.
The sale was called by the U.S. Department of Housing and Urban Development, which said it was not being properly paid back for a loan to renovate the hotel years ago.
Affirmative Equities Inc., a New York real estate company that bought the Patrick Henry and assumed the loan in 1990, is disputing that there is a delinquency, said Andrew Jubelt, president of Affirmative Equities.
"We have no intention after investing several hundred thousand dollars into the hotel of letting any foreclosure happen," Jubelt said.
The scheduling of a foreclosure auction does not in any way prevent the hotel from renting rooms to guests, hosting meetings or operating its restaurant. The 120-room Patrick Henry is open, Jubelt said, and is entering its busiest six months of the year booked full on several upcoming nights.
Times have improved since a soft market this winter that was particularly hard on the region's most expensive hotels, a group that includes the Patrick Henry.
And although the hotel could remain open if a sale took place, the sale will be called off if the hotel pays up, said Joyce A. Tate, a realty specialist with HUD's regional office in Philadelphia.
A foreclosure is a forced sale of property, usually to satisfy an unpaid mortgage. In this case, according to Tate, the federal government scheduled the sale in response to "a delinquency." She declined to comment further, citing the Patrick Henry's right to privacy.
Jubelt said the hotel owes HUD $1.5 million as its primary debt, an obligation payable at about $10,000 per month. The money was borrowed by the hotel's former owners, the Criss family, to install kitchenettes in 120 rooms, he said. When Affirmative Equities bought the hotel in 1990, it paid $3 million and also assumed the debt. It has since spent $3 million on improvements, which most recently included redecorating two ballrooms and putting new furniture in a fourth of the hotel's guest rooms.
Jubelt said Affirmative Equities would be happy to keep paying off the HUD loan, which matures after 2010 and carries an interest rate of 7 percent or 8 percent, terms he considers attractive.
But, Jubelt said, federal officials aren't certain they're interested because the agency is moving away from loans to commercial enterprises. He said HUD wants to sell the Patrick Henry's loan on the commercial investment market.
Hoping to head that off, Affirmative Equities is arranging to buy the loan with money it could raise or borrow, Jubelt said. That way, he said, the company could benefit from a discount in the loan price that HUD probably will offer.
"We are taking very sound, rational steps toward improving our financial posture," Jubelt said.
In 1993, Affirmative Equities faced the possibility of a foreclosure over an earlier mortgage on the Patrick Henry. No sale took place, however, because the company refinanced the debt.
In a separate matter, Jubelt said Monday the hotel is aware of a $11,424 legal judgment against it obtained in Roanoke Circuit Court by Allright Roanoke Parking Inc., which provided parking services to hotel guests and employees. The matter is being negotiated, he said.
Tim Milliron, Allright's president, said the debt has not been paid. The company has ceased billing parking charges to the hotel and has begun collecting them directly from hotel guests and employees who use its lot, he said.
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