The city-owned Lafayette Yard Hotel will be up for auction this
morning as two qualified bidders take paddle in hand and vie to become the
first private owners of the 197-room inn. The auction is set to begin at 10
a.m. in the hotel’s ballroom with a starting price of $5.7 million. Members of
the public are welcome to attend to watch the auction, but will be barred from
putting in any bid on the property. Edison Broadcasting and VBCE, the two
pre-qualified bidders, will be allowed to make successively higher offers on
the hotel until one of the bidders drops out.
The former Trenton Marriott opened in 2002 and city officials had
great hopes that it would be an economic boon to the downtown. The complex,
which cost $60 million to build with its attached garage, has struggled to turn
a profit since it opened.
In July, Marriott pulled its brand from the hotel and the
management company left. A new management company was brought on to try to
revive the property. But when it could not draw in a new flag to put its name
on the aging hotel, the management company, Marshall Hotels, projected it would
end the year $880,000 in the red. The Lafayette Yard Community Development
Corp., the nonprofit board of mayoral appointees who are tasked with overseeing
the assets operations, filed for Chapter 11 bankruptcy protection, saying it
had no cash on hand to pay its bills.
The city will be on the hook to pay back the portion of the $14
million in debt that it backed more than a decade ago that is not covered by
the sale price. The LYCDC borrowed $2 million from lender Racebrook financial
when it went into bankruptcy to cover the expenses of the bankruptcy filing and
to keep the hotel operational pending the sale. That loan will be repaid from
the proceeds of the sale, before the city or any other creditor can be repaid.
Source: NJ.com
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