Loan broker picked for hotel

Ritz-Carlton project is not in trouble, new agent says

October 03, 2001|By Meredith Cohn | Meredith Cohn,SUN STAFF

After months of publicly saying it was on the verge of a deal, the developer of the $156 million Ritz-Carlton hotel and condominium project proposed for Baltimore's Inner Harbor has hired a new broker to search through a sinking economy for lenders for the project.

It's unclear if economic conditions, the Sept. 11 terrorist attacks on New York and Washington or legal entanglements of previous brokers affected past attempts at a deal. Those potential lenders have not been identified.

The new broker, Las Vegas-based Asset Management Financial Corp., said yesterday that the project, which was proposed in February 1999, is not in trouble.

"This is a very positive project, and there's a lot of interest," said Mark Stewart of Asset Management Financial.

The developer, New York-based L.I. Square Corp., said several brokers continue to work on the financing, and several lenders remain interested.

One broker who had been working on the project, Howard D. Zukerman, entered a guilty plea to income tax violations in April and will begin serving a one-year sentence in federal prison this month.

He had been working to secure financing from an Atlanta company, Choice Capital Corp., which said yesterday that it is no longer interested in the Baltimore project.

Financing experts say institutional lenders are being cautious with such large and expensive hotel projects, and the terrorist attacks have made them even more so. But Stewart said he has identified three "very interested" lenders, although he declined to identify them beyond saying they had offices globally.

As with most large deals, it will likely involve a lead institution and several other lenders.

"I expect in the next 30 to 45 days we'll have a commitment," Stewart said.

Stewart said the lenders would look at the number of the Ritz condominiums that have had deposits placed on them, which the developer puts at about 60 percent. They will also look at a variety of other issues, including the expected return on their money, the state of the hotel industry, the reputation of the developer and the hotel flag, or name.

He said the Ritz-Carlton Hotel Co., which has announced it will manage the hotel, is a major plus because of its strong brand name. He also said that Baltimore is within a day's drive of most East Coast cities, and hotel guests would not need to fly, a problem facing other hotel projects since the terrorist attacks threw the airline industry into turmoil.

Stewart will need to work fast to persuade the lenders. The Baltimore Ritz is working under a deadline to make a deal. Developers must exercise an option to buy the Key Highway land for the hotel before the end of this month. The option expired at the end of September but was extended for 30 days.

"L.I. Square's development team and attorneys have been working closely with the current property owners to complete the land acquisition for the Ritz-Carlton Inner Harbor, Baltimore," said Edward V. Giannasca II, president and chief executive officer of L.I. Square.

Giannasca would not elaborate on lenders' names but said he believed that a deal would be reached this month.

If the developer does not close on the land by the end of October, it could face new negotiations with the property's owners that could inflate the price.

The landowners are Richard Swirnow, president of HarborView Properties Development Co., which is developing a housing community next door; the Johns Hopkins University; and Philadelphia-based venture capital firm Lubert-Adler.

The developer has said it will pay a former developer, Stuart C. "Neil" Fisher, a multimillion-dollar fee for giving up his rights to the property. Fisher left the project after questions were raised about his past business dealings.

Giannasca has overcome other local objections to the project, which has the support of neighbors and the city.

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