- Matt Ward
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Watergate Hotel Relegated to White Elephant Status
The Watergate Hotel – the site where the “third-rate burglary” that sparked the biggest political scandal in American history and brought down Richard M. Nixon’s presidency was plotted — is now a distressed commercial property that failed to find a buyer at a much-anticipated auction.
The 251-room hotel, with its spectacular views of the Potomac River, was taken back by its owner, PB Capital, a subsidiary of Deutsche Postbank AG after no bidders expressed interest in purchasing and rehabbing the property in an auction held by Alex Cooper Auctioneers. Monument Realty, which in 2004 bought the 12-story hotel with financing from the now-bankrupt Lehman Brothers, owes PB Capital $44.3 million and is in default on the property. In addition to paying off the loan, the new owner would have to rehab the Watergate, which has been closed for several years. Built in 1967, the legendary hotel needs an estimated $100 million in renovations to bring it up to 21st-century standards.
David Furman, an attorney with Gibson Dunne, is not surprised that the hotel did not interest bidders. “Lenders usually win in these kinds of auctions because they have the ability to credit bid the full amount of their loan. There is usually a negotiated settlement before or after the auction. It is rare that there is an upset at a foreclosure sale.”
According to Monument principal Michael Darby, he has commitments from new investors to restore the Watergate as a five-star hotel. Another developer, Robert Holland, wants to buy the Watergate and is in talks with the United Arab Emirates-based luxury hotel chain, Jumeirah, to operate it.