Delaware Hotel lender opts for auction in bid to avoid taking title

March 6, 2009

Business First of Columbus - by Brian R. Ball

The lender to a foreclosed hotel in Delaware hopes a bit of extra marketing will help it avoid the typical two-step auction process to getting a troubled asset off its balance sheet.

Ciena Capital Funding LLC has hired Lewis Center-based Gryphon Realty Advisors and Oklahoma-based auctioneer National Commercial Auctioneers to drum up interest among investors and hotel operators in the planned March 18 sale of the four-story, 104-room Delaware Hotel at 351 S. Sandusky St.

Lenders who foreclose on a property wind up with the title when a sheriff's sale fails to attract an acceptable price.

"The bank wanted to see if, by marketing the property, they can get more attention than through the (sheriff's sale) legal ads," said Gryphon Realty President Rich Kruse. "It's about getting it done now."

A buyer must pay at least $860,000, or two-thirds of the $1.29 million appraised value of the 37-year-old property, to win the public sheriff's auction.

Ciena Capital filed a foreclosure lawsuit July 31 against owner Pragat Prayosha LLC, which took out a $1.65 million loan in March 2007.

The property sits on 5.4 acres and includes a restaurant, banquet facilities and an indoor pool.

Public inspections of the property will take place March 11 and 18.

Kruse said he expects lenders to follow Ciena's game plan as the faltering economy forces more properties into foreclosure.

"We're seeing a little bit of change in mentality among lenders," he said.