The BRA board last night approved a refinancing plan for the Crosstown Center Hampton Inn on Mass. Ave. in which holders of the project's debt will simply write off a good chunk of the money it owes them.
The hotel's holding company - backed by local real-estate company Corcoran Jennison and developer Kirk Sykes - is seeking to refinance bonds issued in 2002 that carry an interest rate of about 6.5%. The 175-room hotel's holding company has never made any payments on the roughly $43 million worth of bonds, in fact, it defaulted on them in 2009. Under a "forbearance" agreement reached after the default, it is supposed to pay the interest on the bonds.
To help persuade a lender to issue a mortgage at today's lower rates, the BRA and other lenders have agreed to forgive part of what has become roughly $63 million of debt. In the BRA's case, that will mean erasing $500,000 of the $7 million the authority originally sank into the project - and all of the $3 million in accrued interest on that investment.
BRA staffers estimate that with a new, cheaper mortgage, the hotel could finally become profitable starting sometime next summer or fall. Without the refinancing plan, BRA officials warned, the project could simply go under - meaning unemployment for the 50 people who now work there.
Although the BRA has never seen any of its investment paid back, it does receive roughly $300,000 a year in rent payments from the hotel. When the hotel does get into the black, some 40% of the profits would go to repay the BRA.
Last year, Moody's said the hotel's financial outlook remained somewhat shaky.