The new but still not opened Crowne Plaza hotel in Saddle Brook, put on the block after its owner was charged with criminal loan fraud and sued for $72.8 million, has a prospective buyer, according to a court document.
Continental Properties Acquisitions Corp. of Miami has signed a letter of intent indicating its interest in acquiring the former Holiday Inn, rebranded as a Crowne Plaza, along with four other hotels being sold by Nikesh Patel, an Orlando entrepreneur who is in legal trouble.
Under the letter of intent, Continental Properties will be able exclusively to negotiate to buy the hotels for "a defined period of time to be determined by further agreement of all the parties," according to legal papers filed earlier this month in U.S. District Court for the Northern District of Illinois. If a binding purchase agreement isn't reached with Continental Properties during that timer period, Patel can market his hotels to other potential buyers.
Officials at Continental Properties' parent, Continental Real Estate Cos., couldn't be reached for comment about the status of discussions, nor could Patel's attorney, Mark NeJame, who has maintained his client's innocence.
Continental Real Estate manages a portfolio of more than 11.4 million square feet across more than 100 office, retail and multifamily properties in Florida, and offers services including property management, construction supervision, leasing, brokerage, tenant representation, capital markets and accounting.
The Saddle Brook Crowne Plaza, a 12-story, cylindrically shaped landmark visible from Route 80, had been slated to open earlier this month after undergoing millions of dollars of renovations, capped with a purple and gray color theme.
But that debut has been put on hold pending the outcome of negotiations for Patel's hotels, and the staff that had been hired at the 148-room property at 50 Kenny Place has been laid off, said George Mackanin, one of the contractors who was at the site Tuesday.
Patel, 30, and his company Alena Hospitality LLC, bought a leasehold for the rundown 97,000-square-foot former Holiday Inn., which had been vacant for several years, for $1.6 million in July 2013. Patel promised to invest $10 million to renovate the hotel, and the work is about 95 percent complete, Mackanin said. In fact, all of the hotel's guest rooms have been completely outfitted, their beds made up, ready for guests to check in, he said.
On Sept. 30 Patel, who is free on $100,000 bond, was arrested on charges related to another one of his companies, First Farmers Financial LLC. Federal authorities allege that First Farmers sold $150 million in loans that it claimed were backed by the U.S. Department of Agriculture, but actually weren't. One of the companies that First Farmers sold the loans to, Pennant Management Inc. of Milwaukee, has filed a $72.8 million suit against Patel and his companies.
Patel agreed to sell his hotel portfolio, including his Saddle Brook property as well as three hotels in Orlando and one in Peoria, Ill., in an effort to settle the Pennant lawsuit. Proceeds of the sale would go to Pennant Management, court papers said. The company's attorney couldn't be reached for comment.
In addition to the Saddle Brook hotel, Patel is selling the Crowne Plaza Orlando in Lake Buena Vista, Fla.; the Doubletree by Hilton Hotel in Orlando; the Renaissance by Marriott in Orlando; and the Four Points by Sheraton in Peoria.
Chirag Kabrawala, an Orlando commercial real estate attorney, said that all five hotels were undergoing renovations. He added that Continental Real Estate hasn't specialized in hotels per se.
"Everybody is wondering how much they're are willing to pay for the properties, and if they're going to take them all," Kabrawala said. "I suspect they'll probably buy them all. They're a giant company."
It remains to be seen whether Crowne Plaza, part of InterContinental Hotels Group LLC, will permit Patel's properties to continue being part of its chain, Kabrawala said. Officials at InterContinental couldn't be reached for comment.
Mackanin, a Saddle Brook resident who works for Sturdy Construction of New Hampshire, said that Patel visited the hotel this summer and was pleased with the property's overhaul. The building was basically stripped to its concrete, with new windows, new ceilings, new kitchen appliances, rugs, flooring and wall coverings installed.
The hotel's rooftop restaurant has a new, long bar, with racks for wine bottles behind it. The columns in the hotel lobby have been encased in stone, and a café nook set up.
Contractors learned about Patel's problems about two weeks ago, Mackanin said, adding that there was talk of more than one party being interested in the hotels.