The Federal Deposit Insurance Corp. bought the Radisson Plaza Lord Baltimore Hotel at auction yesterday for $6.85 million, closing the books on a failed effort to restore the 66-year-old hotel to its glory days.
The FDIC put the property up for auction after LBH Associates L.P. of Rockville defaulted on a $16 million promissory note from Bowery Savings of New York. The federal agency will take title to the hotel after a Circuit Court judge in Baltimore certifies the sale.
LBH got its original loan in 1985 from both Bowery and Yorkridge-Calvert Savings & Loan of Baltimore, but Bowery bought out Yorkridge's interest in 1986. The government became the hotel's biggest creditor when Bowery failed and was taken over by regulators in 1987.
With interest and penalties, the loan had grown to more than $22 million as of April last year, when the FDIC asked the court to appoint a receiver.
"When you think of Baltimore, you think of the Lord Baltimore Hotel," auctioneer Joseph Cooper said before opening the bidding. "It's an historic, prestigious landmark in downtown Baltimore. The Lord Baltimore is Baltimore."
But the bidding began sluggishly and never picked up much steam. FDIC officials and an unidentified bidder pushed the price up in increments of $50,000 and $100,000, but the numbers never came near the hotel's debt.
"There wasn't a wave of bidding," said the other bidder, who declined to give his name. "It's really not a very interesting story."
The 24-story hotel at Baltimore and Hanover streets lost about $350,000 on operations last year, the bidders were told. It has been operating under a receivership set up by the court last year and is run by an outside hotel management company.
An FDIC official at the auction declined to discuss the agency's plans for the hotel.
In November, when the auction was announced, auctioneer Paul R. Cooper, Joseph Cooper's son, said that LBH Associates also owed the city of Baltimore about $7 million.
At the time, Tom Goetzinger, administrator for loans and guarantees in the city's finance office, said the city supported the renovation as a way of providing more downtown hotel rooms for the Convention Center.
He said that the city lent $5 million to the project through the Urban Development Action Grant program. That money originally came from the federal government, but the city administered the grant.
Mr. Goetzinger said the federal grant was converted into a loan by the city in the hope that the money could be used later for other development projects.