2:39 pm Mon, August 13, 2012 POSTED: 02:39 PM Monday, August 13, 2012 BY: Ben Myers, Reporter New Orleans City Business TAGS: Canal Street Plaza Hotel, Matt Garafolo, Robert Hand, Suites at New Orleans LLC, U.S. Hotel Appraisals
At least one broker believes the owner of the Canal Street Plaza Hotel is asking far too much to sell the property.
Robert Hand said multiple clients have submitted offers, most recently last month, but the offers have not been entertained. Suites at New Orleans LLC is asking $8 million after lowering its price twice since October, when it was listed at $10.5 million. Hand said his clients have since moved on.
Hand did not disclose his clients’ identities or offers, but he said the property is worth about $4.5 million based on potential operating revenue.
U.S. Hotel Appraisals valued the property at $9.8 million in March 2011, although the appraisal assumed the building is fully compliant with public safety laws. Hand said the building needs a new sprinkler system to meet fire codes, violations of which resulted in the city closing the hotel three years ago.
The sprinkler system would cost between $500,000 and $1 million, Hand said, adding that the building needs roughly $3.5 million in overall investment to open as a $75-per-night hotel. The appraisal calls for capital investment of $232,000 in minor renovations.
Listing agent Matt Galafaro acknowledged the building needs work to become code compliant but said the current asking price reflects the needs.
Hand’s estimation of the market value is naturally skewed in his client’s favor, Galafaro said, adding that an assumption of $75 per night does not factor the nearby LSU/VA hospital developments. Rates will “skyrocket” after 2015 when the hospitals are complete, he said.
“The buyer is obviously trying to acquire the property for as little as possible,” Galafaro said.
More than $900,000 in back taxes are owed on the property, though Galafaro said this would be cleared prior to closing.
NOTE: After this article appeared online, city spokesman Ryan Berni explained that the hotel was closed for delinquent property taxes, and a subsequent multi-agency inspection turned up a list of code violations that would need to be addressed before it could reopen. Nola.com reported at the time that a Orleans Civil Court judge permitted the city to proceed with turning off utilities as a result of code violations. Former Mayor Ray Nagin’s administration issued a statement one day before the nola.com report urging the owners to close voluntarily because of unsafe conditions, and threatening to pursue “all legal remedies” if they did not comply.