July 18–FORT WORTH — An investor group that for months has tried to buy the Sheraton Hotel and Spa in downtown Fort Worth out of bankruptcy finally closed the purchase on Wednesday.
1701 Commerce Acquisition, Llc., an investor group of Presidio Cos. in Sacramento, Calif., paid $49 million for the 429-room property at 1601 Commerce St., on the south end of downtown near the Fort Worth Convention Center. The hotel is already under new management, and the new owners promise a multimillion-dollar renovation during the coming year, improving the hotel’s entrance and lobby, restaurant, and meeting and guest rooms.
“We want to make sure the hotel shines,” said Guneet Bajwa, managing principal of Presidio Cos. The renovation, he said, “will touch almost every aspect.”
The hotel will stay under the Sheraton flag, but Interstate Hotels and Resorts, the leading U.S.-based global hotel management company, now manages the property, Bajwa said. IHR has 35 hotels in Texas, including the Arlington Sheraton.
The sale prevents a foreclosure of the property and caps off more than two years of court battles over the site.
Presidio bought the struggling hotel in 2006 and redeveloped it into a Sheraton. But it defaulted on $56 million in loans, and by 2011 the project’s lenders — Dougherty Funding in Minneapolis and Vestin Originations in Las Vegas — were in state district court in Tarrant County fighting over ownership.
Dougherty, which was owed about $45 million, and was the senior lender and Vestin the junior lender. Both were attempting to foreclose on Presidio, but in late 2011, Presidio suddenly deeded the property to Vestin in lieu of foreclosure.
At that point, Dougherty pursued foreclosing on Vestin, but Vestin filed for bankruptcy protection to stave off that process.
Dougherty eventually won bankruptcy court approval to foreclose. But instead of doing so, Dougherty gave the Presidio group nine extensions since February to find financing to close the deal. The hotel continued to operate during the court proceedings.
Bajwa said the deal was complex and took a long time to close. Earlier this year, Dallas-based Prism Hotels & Resorts walked away from its $55 million contract to buy the hotel.
“I’m just happy to be back,” Bajwa said. “It’s absolutely a new capital structure. It’s a big deal.”
Michael Warner, a Fort Worth attorney with Cole Schotz who represented the group that sold the property, said Thursday the hotel can now move forward “without a cloud of issues over it.”
“On behalf of the debtor, I am thrilled and pleased that the sale closed,” Warner said. “This is an important building for the city, whoever owns it.”
The Fort Worth City Council has an economic development agreement on the hotel that rebates the city’s 7 percent hotel tax collected at the property. It has an estimated value of up to $21 million over 20 years.
The hotel was built in 1974 as a Hilton Inn, and was expanded in 1980 with a second tower. It has also operated as a Ramada and as the Fort Worth Plaza Hotel. The hotel has 10-story and 12-story towers.
The Tarrant Appraisal District currently appraises the property at $30 million for taxing purposes.
Sandra Baker, 817-390-7727 Twitter: @SandraBakerFWST
