Harbor Inn up for auction 65-room hotel once part of Lasky empire

$9 million owed Paterakis


September 01, 1998|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

The Harbor Inn Pier 5, which reopened last year after a $12 million renovation but got caught in the web of its principal owner's bankruptcy, is scheduled to fall under the gavel later this month.

The 65-room hotel, part of the once-burgeoning empire of Michael W. Lasky until his Inphomation Communications Inc. television infomercial business filed for bankruptcy protection in February, is set to be auctioned at noon Sept. 18.

The scheduled foreclosure auction of the three-story hotel is being brought by a group controlled by H&S Bakery Inc. co-owner John Paterakis Sr., which bought $9 million in debt on the lodging project several months ago.

"Either someone will come in and buy the property at auction, or we'll likely buy it back because of our debt interest," said Michael Beatty, a vice president of H&S Properties Development Corp., a Paterakis real estate company and the firm developing the $350 million Inner Harbor East project, including a Wyndham hotel.

"We got involved with it to keep the doors open; that was our intention," he added. "It employs a lot of people adjacent to Inner Harbor East and enhances our ability to be connected to the Inner Harbor."

Beatty said Paterakis, who attempted to buy the hotel outright in May for $10.6 million, acquired the debt from Emmes Capital, a New York realty operation.

In all, the Harbor Inn property has liabilities in excess of $11 million. In addition to the Paterakis debt, the city is owed $2 million and annual ground lease payments of $120,000.

The auction of the 711 Eastern Ave. project -- where rooms are marketed for as much as $1,500 per night -- also comes as the Inphomation case's court-appointed trustee is claiming that Lasky funneled money from Inphomation, operator of the Psychic Friends Network, into the hotel, according to court documents.

Paul Michael Sweeney, the Linowes & Blocher attorney appointed as Inphomation trustee, declined to comment on the claims yesterday, but said he would "do what we need to do to protect the interests of the bankruptcy estate."

Attorneys for Lasky and the hotel could not be reached for comment yesterday.

In addition to its rooms, the hotel is home to three upscale restaurants, including seafood eatery McCormick & Schmick's and Lenny's Chop House.

"It's a tricky property, because it's not a Marriott or a Sheraton; it's different," Beatty said. "But we believe we could get it up and running, and make it work with another substantial investment. It needs to be run as a boutique; it's not for the person who wants something typical."

The city sold the former Harrison Pier Five Inn to Lasky and partner Otis Warren Jr. -- who also made a stab at buying the hotel earlier this year -- for $5.5 million in 1995. After a substantial renovation, the Lasky/Warren partnership opened the Harbor Inn last October.

The city took possession of the hotel in late 1993, after the project suffered through years of financial hardship and was delinquent on more than $1 million in property taxes.

Pub Date: 9/01/98

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