1st Fidelity Sells Off Loans, Properties

July 21, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,Sun Staff Writer

First Fidelity Bancorp. has shed more than $50 million of commercial real estate loans and assets formerly belonging to Baltimore Bancorp to help brighten its balance sheet, the company confirmed.

The Lawrenceville, N.J.-based banking company auctioned the loans and properties to four different buyers at the end of June. Many of the properties had been seized by the Bank of Baltimore through foreclosure, in the wake of the collapse of the region's real estate market in 1990.

"This was simply a typical action we take after acquiring a bank," said Barbara Nate, a First Fidelity spokeswoman. "We generally put portfolios of this nature up for sale, and in this case, it involved the Bank of Baltimore."

First Fidelity completed its acquisition of Baltimore Bancorp for $364 million in November. As of June 30, it owned $84.4 million of seized real estate and had nonperforming loans of $191.6 million, a small fraction of its $35.3 billion in assets.

Most notably, the bank sold the first mortgages on both the 37-story Tremont Plaza Hotel and the 13-story Tremont Suites Hotel to a Washington, D.C., investment firm whose partners include former top officials in the Reagan and Bush administrations.

The Carlyle Group, an investment house formed in 1987 that includes former Secretary of State James A. Baker III, former Defense Secretary Frank C. Carlucci and former Budget Secretary Richard Darmon, bought $31 million of the First Fidelity assets.

The Tremont Plaza, a 230-room hotel and office building at 222 St. Paul Place, had been converted from apartments after William C. Smith & Co. Inc.'s purchase of the property in January 1980. The 60-suite Tremont at 8 E. Pleasant St. had also been residences.

The consolidated principal balance of the Bank of Baltimore loan used to acquire and renovate the buildings was $12.1 million at the close of 1993, according to city records. The loan matures in 2001.

Carlyle's price for the hotel mortgages could not be determined, since the Tremont loans were part of a larger package.

Although acquiring the Tremont mortgages could represent the first step toward gaining full control of the two hotels at a time when lodging properties downtown are beginning to look attractive thanks to growing occupancy rates, a Carlyle Group spokesman said the investment firm "has no hostile intentions."

"The mortgages we bought on the Tremont are performing and they are current," said Mark J. Schoenfeld, a Carlyle Group principal. "There was nothing strategic about this."

As of May 1995, the average occupancy rate for Baltimore hotels has risen to 64.7 percent, a 4 percent gain from the comparable month a year ago, according to statistics compiled by Smith Travel Research of Gallatin, Tenn.

By comparison, the Tremont's average occupancy is about 85 percent, thanks in part to aggressive sales and marketing efforts by Deborah D. Smith, the former wife of one of the hotel's general partners.

While the First Fidelity purchase represents only the latest real estate involvement by Carlyle -- which in August 1994 bought 26 Fairfield Inns from Host Marriott Corp. for $115 million -- the firm in the past has largely limited its investments to defense and technology companies.

Since its creation, Carlyle has invested $6 billion on behalf of clients in companies such as Columbia-based GTS Duratek Inc., Rockville-based supermarket chain Fresh Fields, defense contractor BDM International Inc. and Magnavox Electronic Systems.

In 1992, the firm teamed with Northrop Corp. in buying the aircraft division of LTV Corp. for $214 million. Northrop later bought out its partner's interest for $130 million.

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