The landmark Patrick Henry Hotel in downtown Roanoke, Virginia was placed on foreclosure list after the owner filed for bankruptcy. The 89-year-old foreclosed property is scheduled to be auctioned to the highest bidder on August 5 at the city courthouse.
The 125-room property is owned by Affirmative Equities Co., a real estate development and investment firm that filed for a Chapter 11 bankruptcy. Last February, the Chapter 11 case was converted to Chapter 7 bankruptcy due to the company’s failure to reorganize and reconstitute its debt. A Chapter 7 bankruptcy involves selling of the distressed property of the debtor to pay off its debts with creditors.
According to court documents obtained from the U.S. Bankruptcy Court of the Southern District of New York, Affirmative Equities does not have reliable sources of income to pay off the necessary expenses and debts for the downtown hotel, including taxes, insurance and payroll.
Its lender, the Potomac Realty Capital of Delaware filed to foreclose on the Patrick Henry Hotel and its subsequent sale.
Substitute trustee for the sale of the foreclosed hotel, Attorney Bill Mason has already received several inquiries from interested buyers of the foreclosed property even if the sale price has not yet been set.
Typically, lenders offer starting bids during the auction that are equal to the total mortgage owed by the debtor for the property. The bankruptcy court nor Mason would not divulge the total amount of mortgage that Affirmative Equities owed to its creditors.
According to the notice of sale, during the auction for the foreclosed Patrick Henry Hotel, 10 percent of the sale price or $275,000 deposit will be due, whichever is lower. The winning buyer is required to close on the hotel a month later.
According to the Roanoke real estate records, the Patrick Henry Hotel and the land where it is located have an appraised value of nearly $3.7 million. Some city officials and downtown advocates hope that the landmark hotel can be revived.
The Patrick Henry Hotel was a favorite venue for several important occasions, including wedding receptions, school dances and Kiwanis Club meetings.
The hotel was acquired by Affirmative Equities in 1990 for about $3 million. The company plans to convert the property into a senior housing, with the project expected to cost $28.8 million.
However, the conversion plans failed to materialize and the hotel property went into disrepair and eventually closed in 2007.
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