Monument Realty will buy back foreclosed Watergate Hotel
Friday, December 18, 2009
Monument Realty has signed an agreement to buy the Watergate Hotel back from the bank that foreclosed on the property six months ago, sources familiar with the deal said Thursday.
The D.C. developer plans to restore the 251-room property to a luxury hotel and is in talks with several potential operators, the sources said.
If the deal closes early next year as planned, Monument principal Michael J. Darby will have written the next chapter in the serpentine story of the landmark overlooking the Potomac River, part of a complex of buildings made famous by the burglary that led to President Richard M. Nixon's resignation.
Ann Wilhelm, an officer with the holding company that owns the Watergate, confirmed that "there is an executed letter of intent" to purchase it but declined to name the buyer or provide other details, citing a confidentiality agreement.
Monument, which bought the Watergate in 2004 with plans to convert it to high-end condominiums, defaulted on a $40 million loan in June. The company's financing had been backed by Lehman Brothers, which went bankrupt in the failing credit markets. PB Capital, the German-owned bank that held the loan, took the hotel back for $25 million at a foreclosure auction in July after no bidders materialized. The bank set up a holding company and began to market the property.
Darby put together new financing, but he said in October that the bank had rejected a bid from him and his group of investors. About the same time, PB Capital hired CB Richard Ellis, a top commercial real estate brokerage firm, to market the property.
Monument apparently was outbid by developer Robert Holland, an international residential and commercial developer who signed a contract with PB Capital this fall. Holland was working with the Dubai-based Jumeirah Group, owner of a chain of luxury hotels from New York to Dubai, which planned to operate the Watergate.
But Holland said his deal fell through a month ago after he failed to secure financing.
"We weren't able to come to the table with enough cash in the time they allocated," Holland said Thursday. "We put a lot of time and work into it."
Holland's exit opened the door for Darby's group, which has agreed to pay in the $40 million range, sources familiar with the deal said.
Darby declined to comment Thursday, as did Marc Magazine, who is handling the sale for CB Richard Ellis.