Watergate Auction Sees No Bids, PB Capital Holds Property

The Watergate Hotel went to the auction block this morning. According to Reuters, with an opening bid at $25 million, no bids were placed and PB Capital Corp. made a credit bid to wipe out all debts on the property for $25 million. This despite the $40 million the bank was owed by Monument Realty, whose financing partner on the project, Lehman brothers, went bankrupt this past fall.

Ten bidders, including hotel chains and developers both US-based and international, registered, having demonstrated their $1.1 million deposit. However, the $25 million opening bid apparently was more than they were willing to bite off. Several developers remain interested in the property, including Monument, which may ultimately work with PB Capital to buy the property back and continue their plan to develop a hotel with some areas zoned for residential use.

Watergate Auction Tomorrow: Who Wouldn't Want a Building Adjacent to a Piece of History?

When did it all go wrong for the Watergate? The hotel with arguably some of the best views in the city has a lively history - controversial design, Nixon era break-in, failed condo conversion, and now add bankruptcy. Back in 2007, DCMud reported that Monument Realty was ensnared in a legal battle after selling about a dozen units in its attempted condo conversion. Two years later and facing foreclosure on the remaining $40 million (out of $70 million) owed to lender PB Capital, Monument Realty's Watergate goes to auction at Alex Cooper Auctioneers tomorrow. The sale terms listed on Alex Cooper's website detail a process that will require $1 million up front (the starting bid was not disclosed), so be prepared to show the money to get in the door. Paul Cooper, principal at the auction house, said the response so far has been "tremendous," but that he had “given up speculating” how many bidders might show.Monument was given the standard 30 days notice to pack the linens and move out, or secure funds to prevent foreclosure. But with financial times like these and the bankruptcy of Lehman Brothers, the financing partner on the project, no financing has emerged and the gavel will fall tomorrow at 5301 Wisconsin Ave N.W. at 10:15 AM. So if you want to get a chance at owning a piece of history, bring $1m. Which, you might feel good to know, is less than it would have cost to buy a single unit back in the day. 

Washington DC real estate development news