Backers of a proposed $36 million hotel on Wilmington's Christina River waterfront are seeking to put city taxpayers on the hook for $1 million should developers fail to make loan payments on a proposed Westin Hotel on the Riverfront.
Altogether, the developers need to obtain a total of $6 million in loan guarantees if they are to secure financing, said those familiar with the deal.
Michael Purzycki, executivedirector of taxpayer-supported Riverfront Development Corp., confirmed his agency and the hotel's private real estate developer, BPG Hotel Partners XXI LLC, are asking the city to provide $1 million of the proposed loan guarantees.
Owners of BPG Hotel Partners are Robert Buccini of Chadds Ford, Pa., David Pollin of Washington, D.C., and Christopher Buccini of Greenville.
According to Purzycki, the mortgage lender on the hotel wants third-party guarantees in the form of a letter of credit, a document that would obligate payment in the event the developer defaults. The development corporation, on behalf of the developers, is actively looking to secure loan guarantees from both private and public sources, Purzycki said. He declined to reveal the dollar amount the lender is requiring in loan guarantees.
"Lenders are looking to limit their exposure," he said. "As everyone who is financing real estate understands, this is a very difficult banking environment and it takes creativity to put transactions like this one together."
Under the proposed arrangement with the city, the primary lender for the Westin Wilmington Riverfront would have the ability draw on the $1 million in funds if the hotel developer could not make its debt payments, William S. Montgomery, chief of staff for Mayor James M. Baker, said in a statement. Read more