By Lisa Rein
Washington Post Staff Writer
Thursday, July 16, 2009
The Watergate Hotel will be auctioned Tuesday, five years after a developer bought it with hopes of restoring it to its glory days as a Washington icon.
Alex Cooper Auctioneers will take bids that morning at the company's Wisconsin Avenue offices from potential buyers with the capital to invest in one of the city's most famous buildings in the weakest economy in decades.
The city's 30-day notice of foreclosure, sent to hotel owner Monument Realty last month after the company defaulted on its loan, expires today. The notice lists an outstanding $40 million balance on the loan. Monument officials said two weeks ago that they hoped the lender, New York-based PB Capital, could agree to new terms before the property across from the Kennedy Center was forced into foreclosure. But apparently new investors did not step forward in time.
The hotel has been shuttered since 2004, when Monument bought it. It is not the first commercial property in the region to go on the auction block in recent months. But the sale of the hotel, part of the complex of six buildings made famous by the 1972 burglary that led to President Richard M. Nixon's resignation in 1974, is a signal that even such a prominent property is not immune.
Monument, in particular, was hurt by bad timing. Lehman Brothers, a partner and equity investor in the property, declared bankruptcy last year. The developer had also been delayed by a legal battle with neighbors over its initial plans to turn the hotel into luxury co-ops. By the time Monument was ready to redevelop it last year as a luxury hotel, the market had soured.
Monument spokeswoman Natasha Stancill declined to comment last night on the auction.
William Diedrich, who lives in Watergate East, the residential tower whose residents challenged the conversion in court, called the auction a potentially "good thing" because a new owner could revive plans to restore the hotel. "We want to keep the place lit at night," he said. "We want to keep it alive."
The listing on Alex Cooper's Web site does not name the Watergate but describes a "12-story, multi-unit hotel with garage space and leasehold interest in portion of adjacent building." The winning bidder will be required to put down $1 million.
Staff writer James Hohmann contributed to this report.