Grand Hyatt, Regency combining Angelos gains accord on joint ownership and management

1,400 rooms for conventions

October 29, 1998|By June Arney | June Arney,SUN STAFF

Baltimore lawyer and Orioles owner Peter G. Angelos has sealed an agreement with Hyatt officials that combines the ownership and management of the Hyatt Regency hotel with the proposed Grand Hyatt, creating a single large entity.

"By combining the existing Hyatt Regency with the Grand Hyatt under one ownership and management, we will be able to have a convention center headquarters hotel of almost 1,400 rooms," said Thomas N. Marudas, a spokesman for Angelos, who is behind the 850-room Grand Hyatt to be located adjacent to the Baltimore Convention Center. "This will allow us to compete with Philadelphia and other major cities."

Developers are pursuing financing and hope to have it soon. But Marudas declined yesterday to speculate on when that deal might come together.

Combining the hotels will "guarantee the success of the convention center and be the magnet to bring large conventions to Baltimore and fill all of the city's hotel rooms," Marudas said in a statement.

Angelos had asked for two extensions in his exclusive negotiating privilege with Baltimore Development Corp. to build the $150 million hotel. That second extension was good until Nov. 18. Completing the deal with Hyatt was at the top of the list of requirements, according to M. J. "Jay" Brodie, BDC's president.

The Grand Hyatt had been planned for completion by 2001, but because of delays, the hotel probably cannot be completed before mid-2002, according to one industry expert.

Although sluggish capital markets have fueled speculation that hotel developments will suffer, Marudas said yesterday that he is not worried. "We do not think that the downturn in the capital market is applicable to the Grand Hyatt," he said.

But with three proposed large downtown hotels -- the Grand Hyatt, the Westin and Wyndham Inner Harbor East -- facing delays in Baltimore, many believe those market shifts may indeed be a complicating factor. As capital markets dry up and corporate travel budgets shrink, people who finance hotels have to make even tougher strategic decisions about which projects to pursue.

"The problem is that the capital sources that were pouring money into hotel projects have paused," said Tom Shea, a broker with Corridor Commercial Real Estate Group in Baltimore who represents the firm that will buy yet another downtown hotel project, Embassy Suites at 1 Light St., when it is completed.

"They think Baltimore is a strong market, but there isn't as much money available for real estate development in general as there was six or eight months ago."

Patriot American Hospitality Inc., which will own the Wyndham once it is completed, has acknowledged that financing has taken longer than expected. Construction, which was to start in September, is planned by year's end.

But Patriot's shares are down about 70 percent this year. The company could face a cash-flow struggle to repay, by year's end, about $310 million of financing that turned out to be a bad bet on its stock price. Patriot also has $400 million in bank loans coming due in January.

Analysts say the Dallas-based company may have to sell some of its 486 hotels or take on new debt.

When Wyndham started negotiating, Patriot shares traded in the $30 range, compared with about $10 now, Shea said.

"They like Baltimore," Shea said of Patriot American, which owns Baltimore's Omni. "It's probably just a question of how much capital they have for development."

A ceremonial groundbreaking was held in June for the 31-story Wyndham, but, although construction permits have been obtained, little has happened since.

Despite the construction delay and several lawsuits filed in connection with the $134 million project led by Baltimore businessman John Paterakis Sr., the Wyndham remains on target for completion in autumn 2000, according to a spokesman for Patriot American.

Patriot American officials tout the hotel's involvement in the local community as a symbol of its commitment.

Wyndham is involved with community projects that include SuperKids Camp and the Living Classrooms Foundation, and has become presenting sponsor of Monumental Occasion, the December lighting event at Baltimore's Washington Monument that draws thousands.

The $124 million Westin, planned for the former News American site at 300 E. Pratt St., had been scheduled for groundbreaking next month, but no building permits have been obtained. That project now is slated to begin during the first quarter of next year, putting it on target for completion in late 2000, according to a source close to the project.

New York developer Harvey Schulweis is behind the 600-room project, which is being built with no public money.

Schulweis is working with ING US Realty Corp., a subsidiary of ING Group.

ING Group is one of the largest financial services corporations in the world, with more than $400 billion in assets and a real estate portfolio of approximately $10 billion.

Pub Date: 10/29/98

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