Thursday, October 27, 2005
 
Sic Semper Public Privatus
Another public/private investment on the brink of failure:
    The financing for the Renaissance hotel complex downtown took years to put together, but the hotels' owners have only a few months to restructure their debt in an attempt to avoid a default.

    The owners of the Renaissance Grand and Renaissance Suites owe bondholders $3.5 million of interest on Dec. 15, a payment that may exhaust the hotels' debt-service reserve. With that exhausted, prospects for making the next payment in June would be bleak.

    Enter Steven Stogel, a St. Louis developer who helped to structure the original financing. Stogel has agreed to serve as an unpaid go-between in negotiations among the hotel owners, bondholders and other interested parties, including the city of St. Louis.
Municipal governments do tend to put their investments in particularly sketchy endeavours that lose money, like sports teams and other attractions, but unfortunately, they're investing in utopias, not looking at bottom lines.
    The long-term answer to the hotels' problems, of course, is to attract more conventions to St. Louis. The city has attracted only half as many meeting-goers as planners expected when the hotels were built.
If you build it, they will come is not so good of an investment philosophy. Particularly since they'd have to travel down some awfully rutted roads to get there and once they got there would have to pay punitive taxes for the privilege.


- posted by Brian J. @ 5:58 AM
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