Omni Severin lenders seek auction

Abstract

Two creditors have filed foreclosure lawsuits against the owner of the Omni Severin Hotel downtown, seeking judgments totaling more than $45 million and requesting a sheriff's sale of the property. The suits, filed last month in Marion County Superior Court, claim the Georgia Street Hotel Partnership has defaulted on two mortgages on the 423-room downtown hotel. Located at 40 W. Jackson Place across from Union Station, the Omni Severin is the fourth-largest hotel in Indianapolis, according to the IBJ Book of Lists. (excerpt)

Two creditors have filed foreclosure lawsuits against the owner of the Omni Severin Hotel downtown, seeking judgments totaling more than $45 million and requesting a sheriff's sale of the property.

The suits, filed last month in Marion County Superior Court, claim the Georgia Street Hotel Partnership has defaulted on two mortgages on the 423-room downtown hotel.

Located at 40 W. Jackson Place across from Union Station, the Omni Severin is the fourth-largest hotel in Indianapolis, according to the IBJ Book of Lists.

Partnership records filed with the city list Cornelius Alig and Harold Garrison, principals with Mansur Group Inc., among the investors in the Georgia Street Hotel Partnership.

Mansur, one of the largest real estate development firms in the city, is developer of the Omni Severin.

Ernie Reno, director of corporate communications for Mansur, expressed confidence the suits would be settled out of court without affecting the operations of the hotel or Mansur.

Mansur represents the Georgia Street Hotel Partnership and is not a party in the lawsuits, Reno said. Mansur is negotiating with the creditors on behalf of the owners, he said, to work out a refinancing and avert a foreclosure.

The suits are "only a procedural step" the creditors needed to take to protect themselves in case an agreement couldn't be reached, Reno said.

One of the lawsuits was filed by Kearny Street Real Estate Co. of Los Angeles, which holds the initial mortgage for the Omni Severin taken out by Georgia Street in 1998. Kearny Street is the third party to control that mortgage.

The suit claims that as of March 31, Georgia Street owed Kearny Street $15.9 million in principal, $4.3 million in unpaid interest, and additional sums for taxes, insurance and attorney's fees.

Another suit was filed by Colorado-based U.S. West Financial Services Inc., which holds a second mortgage on the property taken out by Georgia Street in 1990.

That suit claims Georgia Street owes U.S. West $10 million in principal, $5.6 million in unpaid interest, and additional sums for other expenses.

Both suits request that the property be seized and sold by the Marion County sheriff to pay off the loans.

Elliott D. Levin, an Indianapolis attorney who represents Kearny Street, said he and his client make it policy not to comment on pending litigation.

Larry J. Wallace, an Indianapolis attorney who represents U.S. West, also declined comment, but he did say no court date had been set for the suit.

The Omni Severin is undergoing a $4 million remodeling that Georgia Street is financing itself, according to Reno.

"We're not stupid, and we wouldn't put that much money into a place if we thought we were going to lose it," he said.

The Georgia Street Partnership bought the former Atkinson Hotel in 1988 and secured a $26 million mortgage from Security Pacific National Bank to help finance a $40 million redevelopment and expansion of the property.

The suits show a history of loan modifications with Security Pacific, then with Bank of America, which bought the mortgage in 1991. Kearny Street purchased the loan in 1993.

U.S. West made a second-mortgage loan of $10 million to Georgia Street in 1990, according to the suits.

Reno said it took longer than expected for the hotel to meet revenue projections, which caused Georgia Street to fall behind in its payments.

The owners had worked out new payment schedules over the years, Reno said, but negotiations have been hampered by the two transfers of the initial mortgage.

Reno said the hotel is "sustaining revenues and performing well," and that he expects something to be worked out in eight to 10 weeks.

Late last year, an Omni official said the hotel's performance had improved markedly. For the first 11 months of the year, occupancy was 77 percent--7 percentage points ahead of a year earlier.

Officials from Hampton, N.H.-based Omni Hotel Corp., which manages the Omni Severin, could not be reached before IBJ's deadline.