Claims switch to Wyndham brand is default
The loan servicing company for banks that hold a mortgage to the Wyndham hotel in downtown Springfield has foreclosed on the property, claiming that the hotel’s switch from the Hilton to Wyndham brand in January violated loan terms.
LNR Partners, a property management firm that also services commercial real-estate loans that fall into trouble, is also seeking appointment of a receiver to take over operations at the downtown Springfield landmark.
The hotel’s owners in court documents say that they’ve never missed a payment on a $17.3 million 10-year mortgage taken out in 2007. More than $15 million is still owing on the loan. The hotel is owned by Pinnacle Partnership, which includes the late Dennis Polk, who died last month, and Robert Egizii of Leland Grove, who says that he is the majority owner.
“We haven’t done anything wrong,” Egizii said. “They can’t prove anything wrong. We’re not late on anything.”
Attorneys for the hotel say that the facility generated more than $2.3 million for the city of Springfield alone in 2015. William McCarty, city budget director, said that he could not immediately verify that number but noted that the hotel generates property, sales and hotel-motel taxes for the city.
“I would be willing to bet that it’s significant, probably from a hotel-motel tax standpoint alone,” McCarty said. “That’s one of the primary hotels.”
Lawyers for the bank don’t deny that the hotel is current on payments but say that Pinnacle breached loan terms by switching to the Wyndham brand without required permission from the plaintiff. Beyond the original principal and interest due, the bank is seeking a default penalty of more than $2,100 per day since May of last year, when the bank alleges the hotel owners voluntarily ended their franchise agreement with Hilton. Default penalties alone totaled more than $574,000 as of late April, when the bank filed its foreclosure action and requested a total award of nearly $16 million.
Egizii said he’s working on refinancing the loan and is “100 percent” confident that he’ll succeed. He said that Hilton wanted Pinnacle to spend as much as $20 million on property upgrades. The plaintiff says that the hotel voluntarily terminated its franchise agreement with Hilton, but the partnership in court documents says that Hilton in the summer of 2014 decided not to renew the agreement, which was scheduled to end in November, several months before final payment is due on the mortgage.
Egizii in an interview said that Hilton’s decision to make the President Abraham Lincoln Hotel a Doubletree franchise spoiled his relationship with the hotel company. Doubletree is a division of Hilton, and Egizii says that the franchise agreement with the Abraham Lincoln, which is across Adams Street from his hotel, took him by surprise. He said that his business was harmed when potential guests contacted Hilton and found that rooms at the Abraham Lincoln were considerably cheaper than rooms in his hotel.
“As far as I’m concerned, they made a mistake when they put the Doubletree across the street and never even talked to us,” Egizii said. “That was about all I could handle.”
While acknowledging that Hilton had asked the owners to invest between $15 million and $20 million in the hotel as part of franchise renewal, Egizii said that he has a 20- year franchise agreement with Wyndham and that the hotel is up to standards.
“We keep it up all the time,” Egizzi said.
“We’re progressive, 100 percent. We don’t have any spaces in the hotel that aren’t up to date.”
A hearing to determine whether a receiver should be appointed is scheduled for July
Contact Bruce Rushton at brushton@illinoistimes.com.
