Collapse of CentrePointe’s Marriott & Foreign Financing?

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Business Lexington recently ran an interview-cum-press release with Webb Company’s chieftan Woodford Webb. (Webb is the new chair of Commerce Lexington.)

Here’s a hard-hitting excerpt:

BL:What is the status of the Webb Company’s downtown project, CentrePointe?
WW: One of the things that the community and your readers may want to realize is that the appeals by some of groups, Preserve Lexington in particular, they didn’t burn off and expire until January 4, which really slowed some things down. And you have to realize that this is a large project and to finalize architectural plans and permitting processes does take some time. But I think we’re really poised to report some very good news here soon. And so the hope is that by this spring you’ll see a lot more activity than you see now.

BL: I don’t think people could be faulted in these times for wondering if the finances are there?
WW: The finances are there.

Apparently that answer is good enough for BizLex. And why shouldn’t it be — Mayor Newebberry and perhaps too many of our state legislators are similarly willing to take that Webb’s word for it.

It’s been the Webb Companies’ strategy from the outset: Blame those who tried to save the block from becoming a pointless mud pit, assert a truth you’re not willing to defend, claim Marriott remains gung-ho about the project, and insinuate some foreign Arab big $$$ is backing the deal.

But just because BizLex and our Mayor and those boys in Frankfort aren’t willing to look a little deeper, it doesn’t mean we can’t.

Let’s start with the Friday’s Wall Street Journal:

Marriott International Inc. slipped into the red during the fourth quarter, as leisure and corporate travel dried up across the globe.

Company executives warned the lodging business could deteriorate further this year.

The hotel company reported a fourth-quarter loss of $10 million…. Revenue per available room, a key hotel-industry measure, dropped 7.5% at Marriott’s properties world-wide.

The Bethesda, Md., company also reported a $55 million charge for restructuring costs as it cut staff and canceled projects.

Canceled projects! Say it ain’t so.

Let’s see — there was that Marriott that destroyed a city-wide block in Downtown Austin.

There’s the $100 million Marriott in South Florida that would’ve been built on city-owned land in the downtown historic district. In scrapping that one, developers blamed the economic downturn and their worry about “the city’s ability to build a promised parking garage after its estimated costs quadrupled to $48 million.”

The Marriott in downtown Fort Wayne, IN is still on hold while its developer hunts for financing. And there’s another stalled Marriott in downtown Birmingham, AL.

The list goes on.

Oh, and then there’s Marriott International’s “Earnings Call” with investors this past Thursday. It’s delightful reading, but if you don’t have time, here’s a taste, straight from the mouth of Arne Sorenson, CFO of Marriott:

As we look ahead beyond 2009 U.S. hotel supply growth is likely to substantially trail demand recovery. This is the reverse of the situation we will encounter this year but it is clearer than ever that the brakes on new construction are being and will be applied more dramatically than ever before. This is not likely to change for some time.
….
There is obviously more risk in the rooms that are financed but not under construction yet than there are on the rooms under construction and the most risk on the projects that maybe we have received a franchise fee and it has been approved and we have got signed contracts but they haven’t either financed or started construction.

And if all of that wasn’t enough for you — it was certainly too much for BizLex and Jim Newberry — here’s a little peak from the New York Times at how things stand on the economic front in the Middle East, where this phantom funding supposedly comes from:

With Dubai’s economy in free fall, newspapers have reported that more than 3,000 cars sit abandoned in the parking lot at the Dubai Airport, left by fleeing, debt-ridden foreigners (who could in fact be imprisoned if they failed to pay their bills). Some are said to have maxed-out credit cards inside and notes of apology taped to the windshield.
….
Some things are clear: real estate prices, which rose dramatically during Dubai’s six-year boom, have dropped 30 percent or more over the past two or three months in some parts of the city. Last week, Moody’s Investor’s Service announced that it might downgrade its ratings on six of Dubai’s most prominent state-owned companies, citing a deterioration in the economic outlook. So many used luxury cars are for sale , they are sometimes sold for 40 percent less than the asking price two months ago, car dealers say. Dubai’s roads, usually thick with traffic at this time of year, are now mostly clear.

But, hey. Who are we to question the Mayor and the Webbs? What do we know?

There is no need to worry about the CentrePointe financing. The financing is there. Leave the economic questions to the experts.

Ceci n’est pas une hole in the ground.



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