Belvedere sells for $3.5 million, to close Jan. 1

December 28, 1990|By Patrick Gilbert | Patrick Gilbert,Evening Sun Staff

The once grand Belvedere Hotel is passing into new hands with its purchase at auction for $3.5 million by a subsidiary of Meritor Savings Bank of Philadelphia.

Yesterday's sale means control of the midtown landmark is no longer in the hands of Victor Frenkil, the local businessman who once had hoped to restore its elegance. It also ends the city's 15-year involvement with the Belvedere.

Kenneth F. Davies, the trustee appointed by the U.S. Bankruptcy Court to oversee the hotel, said none of the 112 hotel rooms will be rented after Jan. 1, and the Owl Bar & Grill and the John Eager Howard Room restaurant will also close Jan. 1.

Over the years, the city pumped about $6.5 million into the hotel and tried desperately to recoup the money.

John J. Hentschel Jr., chief of the city's real estate division, said the city is pondering legal action to recover the $6.5 million. Unless the city wages a successful court battle, its money is gone, he said.

Hentschel said "it just wasn't feasible" for the city to outbid Meritor and attempt to resell the hotel. The purchase price and the money the city has already poured into the hotel would be more than its sale price in "today's poor real estate market," he said.

Before the bidding began, Doris Barnes sat in the hotel's Charles Room off the main lobby and pictured herself back in the hotel during the 1930s. She reminisced about grand balls she attended there more than 50 years ago in the 12th-floor ballroom.

"The women would try to out-dress each other and the men wore white ties and tails," she sighed. "It was a beautiful, absolutely gorgeous hotel. They don't dress like that anymore. They don't have hotels like the Belvedere anymore either. Everything has its time, I guess."

Frenkil came to the auction, standing in the doorway of the Charles Room where the sale took place.

Asked if he planned to make a bid, Frenkil replied:

"I've already put my money into this place. I saved the hotel and I saved the neighborhood. I'm just here watching the show."

Frenkil quickly left after the banging gavel signaled the end of the sale, but not without first telling Hentschel.

"I want to give the city all the credit for screwing this thing up."

Meritor, which held the first mortgage, was the only bidder for the 87-year old hotel at the foreclosure sale conducted by Alex Cooper Auctioneers.

The $3.5 million bid held as auctioneer Joseph A. Cooper intoned: "One more call. Three million, five hundred thousand bid, three million, five hundred thousand up, three million, five hundred thousand advance. Here it goes the final time. Three million, five hundred thousand to the gentleman on the left."

The gentleman on the left was Arno Krumbiegel, executive vice president of Twelfth Street Realty Corp., the real estate division of Meritor.

Krumbiegel referred questions to James A. Cole, a local attorney who supervised the auction for the bank.

Cole said Meritor will try to sell the hotel on the private market. He declined to say if the bank has any particular kind of buyer in mind.

Cole also declined to say at what price Meritor would have let the hotel go to another bidder nor would he say what price the bank might seek in a re-sale. He did say the hotel was appraised two weeks ago for $3.9 million.

The sale must be ratified by the Baltimore City Circuit Court which authorized the foreclosure sale. That should come, Cole said, by the end of January.

In 1975, the hotel was purchased for $650,00 by One East Chase Street Associates Limited Partnership, led by Frenkil. The partnership filed for bankruptcy last year.

One East Chase owed Meritor, as the head of a consortium of banks which held the first mortgage, $4.5 million. The partnership also owed the city approximately $6.5 million.

After Frenkil purchased the Belvedere, he received $4.5 million in city-backed loan guarantees to convert the building to apartments. Then, four years later, the city decided it needed more hotel rooms to lure big conventions and granted Frenkil a $3 million direct loan to convert the apartments back into hotel rooms.

The loans and loan guarantees were granted during the administration of then-Mayor William Donald Schaefer which was eager to put the vacant and deteriorating building back onto the tax rolls.

The city's investment included:

* $4.5 million in loans and city-backed loan guarantees to One East Chase which grew with accrued interest to a present total of around $6 million.

* $512,000 for a promissory note the city bought in 1987 from USF&G.

The note, with a face value that ultimately reached $10 million, was issued from Baltimore Contractors, which Frenkil owned, to One East Chase, headed by Frenkil, for renovation work the company did at the hotel.

USF&G obtained the note in legal action against other Frenkil business interests.

Hentschel said the city, working with Frenkil and Meritor, spent over two years trying to sell the Belvedere.

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