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Lender seeking to foreclose on northwest-side hotel

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A creditor claiming it is owed $6.4 million by the operator of a northwest-side hotel is attempting to foreclose on the property.

Colfin NW Funding LLC filed suit Nov. 30 against Park C Limited Partnership, the borrower that operates the Courtyard By Marriott Hotel Northwest under Indianapolis-based Schahet Hotels Inc. Schahet operates several other hotels in the metropolitan area.  

The lender is asking a Marion Superior Court judge to foreclose on the Courtyard By Marriott property and appoint New York-based Gemini Real Estate Advisors LLC as receiver to sell the hotel’s assets.

The three-story Courtyard By Marriott Northwest has 87 rooms and three suites.

The foreclosure filing follows two letters from Colfin dated May 21 and June 2, in which it demanded payment on a note executed in December 2007.

“The borrower failed to pay the creditor upon demand,” the lawsuit said. “As a result of the defaults and per the terms of the demand letter, the creditor declared the entire amount of the note to be due and payable in full by the borrower.”

Colfin’s $6.4 million judgment request includes $5.8 million in principal and $452,734 in interest charges, as well as various other fees.

C. Daniel Motsinger, an attorney at Indianapolis-based Krieg DeVault LLP who is representing Colfin, declined to comment on the case.

Elliott Levin of local law firm Rubin & Levin PC, who is representing Park C Limited Partnership, did not return phone calls. Neither did Greg Schahet, chairman of Schahet Hotels.

Tim Worthington, a 35-year industry veteran who is president of locally based Platinum Hotel Solutions, said Schahet Hotels has a reputation as a “good” operator.

“All I know is the northwest side of town is pretty tough. I don’t know if it’s too many hotels there or what,” he said. “It’s not just them. Everybody is having trouble up there.”

Suburban hotels across the Indianapolis area have been hit particularly hard by the economy, with occupany rates well below 60 percent in most submarkets. 

In July, it was announced a Holiday Inn along Interstate 69 just north of 96th Street would go up for auction. Minneapolis-based hotel chain AmericInn purchased the hotel, giving the company its first Indiana location.

Officials for locally based Dora Brothers Hospitality Corp., which owned the 78-room hotel, sold the property after it could not secure financing from a lender to make needed improvements.

In October, two Baymont Inn Hotels, one in Greenwood, the other in Plainfield, were set to be sold by auction after the creditor took control of the properties through foreclosure.

And, late last year, foreclosure proceedings started on a Knights Inn near Interstate 465 and State Road 37 on the city’s south side and resulted in the sale of the property.

Schahet Hotels operates 10 hotels—seven in Indianapolis, one in Carmel and two in Schenectady, N.Y.

Besides the Courtyard By Marriott Northwest, its local operations include four Hampton Inns located downtown, near Indianapolis International Airport, on West 73rd Street and on North Meridian Street in Carmel.

The company also operates the Holiday Inn Express next to the Courtyard By Marriott Northwest on Woodland Drive and the nearby Residence Inn By Marriott Northwest on Digital Way.

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  1. PJ - Mall operators like Simon, and most developers/ land owners, establish individual legal entities for each property to avoid having a problem location sink the ship, or simply structure the note to exclude anything but the property acting as collateral. Usually both. The big banks that lend are big boys that know the risks and aren't mad at Simon for forking over the deed and walking away.

  2. Do any of the East side residence think that Macy, JC Penny's and the other national tenants would have letft the mall if they were making money?? I have read several post about how Simon neglected the property but it sounds like the Eastsiders stopped shopping at the mall even when it was full with all of the national retailers that you want to come back to the mall. I used to work at the Dick's at Washington Square and I know for a fact it's the worst performing Dick's in the Indianapolis market. You better start shopping there before it closes also.

  3. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  4. If you only knew....

  5. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

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