A last minute deal has helped a local hotelier avoid losing ownership of one of its flagship Richmond properties.
Shamin Hotels confirmed Thursday it has reached an agreement with the lender on its Hilton Richmond Hotel & Spa at 12042 W. Broad St. in Short Pump to stave off a foreclosure auction that had been scheduled for Sept. 28 on the steps of the Henrico County Courthouse.
“We are pleased that we were able to come to an agreement with the lender last week,” Shamin CEO Neil Amin said in an email to BizSense. “It wasn’t a financial decision, but one based on the personal connection we have with the community where we live and to ensure that the hotel continues to be a first-class amenity for the Richmond region. Although the pandemic continues to challenge our industry, we will continue to re-invest in our people and hotels.”
Amin would not discuss the terms of the agreement.
Attorney Henry Brandenstein with the Venable law firm, which had been handling the foreclosure process, also confirmed the auction was cancelled at the request of the noteholder.
In addition to allowing Shamin to continue its ownership of the hotel, the deal calls for the company to return to running the day-to-day operations of the property, which for the last 10 months had been handled by a court-appointed receiver.
The 254-room hotel was placed into receivership in January after Shamin defaulted on a $45 million loan secured by the property.
Shamin fell behind on loan payments on the Short Pump Hilton beginning in April 2020, as COVID-related closures and social distancing hit the property hard — particularly its events business.
Among the region’s largest hoteliers with more than 60 hotels mostly around the mid-Atlantic, Shamin built and opened the hotel in December 2009 as an anchor to the Towne Center West development. The defaulted loan was borrowed in 2013 from JP Morgan Chase and was then bundled into a package of commercial mortgage-backed securities or CMBS.
The group that had been pursuing the foreclosure is an entity representing the holders of the CMBS loan. That group, acting as 12042 West Broad Street Holdings LLC, filed a lawsuit in Henrico County Circuit Court last December to have the court appoint a receiver to take over the hotel and keep it operational.
The receiver, Northern Virginia-based Crescent Hotel Management Services, was ultimately appointed by the court in January. It continues to operate the property until this new agreement is memorialized by the court.
The CMBS loan had a balance of $46 million prior to the receivership. The original loan was a non-recourse loan, meaning the noteholder can’t come after Shamin for the remaining balance after foreclosure.
The Hilton property is among dozens of hotels in Henrico County that saw values plummet as a result of a loss in revenue due to the pandemic. The county most recently assessed the hotel at $12 million, down nearly two-thirds from $35 million in 2020. Hotel assessments are based in part on their revenue.
Shamin has stayed busy nevertheless. The company is nearing completion on construction of the nearby Home2Suites at 209 Towne Center West Blvd. It also is under construction on a Home2Suites next to its Embassy Suites property near the corner of West Broad Street and Glenside Drive, and a Moxy Hotel by Marriott at 501 E. Franklin St. downtown.
The company also has purchased four existing hotels this year, including three at the Virginia Beach oceanfront and one in Newport News.