ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, July 18, 1996 TAG: 9607180035
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: JEFF STURGEON STAFF WRITER
THE PATRICK HENRY HOTEL is slated to be auctioned off Friday, but the hotel owner plans to pay before the 11 a.m. deadline.
The Patrick Henry Hotel in Roanoke will be sold Friday unless its owner catches up on a debt, federal officials said.
Affirmative Equities Inc. of New York must pay an undisclosed sum by 11 a.m. that day or a foreclosure auctioneer will begin taking bids.
"I have the go-ahead until they give me the stop," said Christine Maggard, a foreclosure specialist who is scheduled to travel from Virginia Beach to hold the auction on the steps of Roanoke Circuit Court.
A cellular phone will enable her to stay in touch with authorities and learn if the company pays at the last minute.
Andrew Jubelt, president of Affirmative Equities, said his company will pay up Friday morning before the scheduled auction.
"I'm just coordinating funds and wiring instructions," he said Wednesday. Affirmative Equities is a New York real estate company that primarily owns and operates apartment complexes.
Whatever happens, the 71-year-old hotel will stay open. All 124 of its rooms are booked Friday night, many by convention guests.
The federal Department of Housing and Urban Development is trying to collect on a 1975 loan of $1.8 million for renovations. Affirmative Equities didn't borrow the money, but agreed to take over the payments when it bought the hotel for $3 million in 1990. At that time, $1.5 million remained to be paid. According to a notice filed earlier this month in Roanoke Circuit Court, the hotel owner has defaulted.
A foreclosure is a forced sale of property, usually to satisfy an unpaid mortgage. If Friday's auction takes place, a federal government representative is likely to open bidding by offering the federal government's minimum price, which was not disclosed in advance, said Maggard, the foreclosure commissioner. The proceeds would go to paying auction costs and the hotel's debts, including the amount owed federal authorities. Leftover funds, if any, would go to Affirmative Equities.
In addition to the $3 million purchase price, the hotel's owner has said it spent $3 million on renovations. The hotel takes in $3.9 million and has expenses of $2.8 million annually, a difference of $1.1 million, HUD said. Last year, an average of 75 percent of its rooms were full each night and the average price received for a room was $64.50.
The loan, taken out more than 20 years ago, paid to expand the rooms and improve them with kitchens so they could function as apartments. The total number of rooms, originally more than 300, was reduced to 124.
Operated as a hotel, the Patrick Henry can offer a large average room size of about 800 square feet and room amenities such as hair dryers and irons. A basic room runs about $99 and a suite with a separate living room runs $150, but discounts bring the actual price below those rates.
Buyer interest is heavy, said Joyce Tate, a HUD representative.
LENGTH: Medium: 65 lines ILLUSTRATION: PHOTO: ALAN SPEARMAN Staff A foreclosure auctioneer will takeby CNBbids for the 71-year-old hotel if the money doesn't arrive on time.
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