Former owner still wants to transform it into a luxury hotel
(WASHINGTON) The Watergate Hotel, part of the complex made famous by a US presidential scandal, failed to attract any bids at auction on Tuesday and was taken back by the lender that held the US$40 million note on it.
PB Capital Corp took back the property after the auction opened at US$25 million to a silent room. The lender will now try to find a buyer, said Paul Cooper, vice-president of the auction house, Alex Cooper Auctioneers.
But the former hotel owner, Monument Realty, still wants to transform the Watergate into a luxury hotel with a small residential component, according to Michael Darby, Monument's principal.
'We have investors who are ready to move the project forward and develop it back into a first-class hotel,' Mr Darby said.
Opened in 1967, the hotel is one of six buildings in the Watergate complex, which also includes the office building where the 1972 burglary of the Democratic National Committee headquarters occurred - a crime that led to then-president Richard Nixon's resignation. Four of the burglars stayed at the hotel.
Over the years, the hotel has drawn a number of famous faces, including Liberace, Katharine Hepburn, Andy Warhol and John Wayne.
When Monument Realty bought the hotel in 2004, it planned to covert it into upscale cooperative apartments. But some residents at existing co-op apartments in the Watergate complex challenged the conversion in court, arguing that a hotel was better for the health of the complex. Meanwhile, the housing bust made residential conversion less profitable for the company.
Ultimately, in 2007, Monument Realty decided to close the Watergate for an 18-month, US$170 million renovation. At the time, Mr Darby said that the landmark would be developed into a premier hotel, with plans for US$2,000-a-night suites.
But frozen credit markets scuttled plans for the multimillion dollar refurbishment, and Monument Realty defaulted on the loan from PB Capital.
About 10 bidders registered for Tuesday's auction, Mr Cooper said.
Most of the bidders - who included developers and owners of hotel chains - sat in 11 white chairs in the front of a room packed with international media and spectators, including a handful of residents from the Watergate complex.
'It's really a privilege for our firm to hold this sale,' said Joseph Cooper, president of the auction house, before he started the bidding at US$25 million. 'This is an opportunity to invest in one of the city's most famous landmarks.'
After asking twice for higher bids, he tried one more time. 'Twenty-five million. Any advance?' he said. 'Third and final call!' No one responded. -- AP
Source: Business Times, 23 July 2009