Excerpts:
“Alkesh Patel, a 44-year-old immigrant from India, borrowed about $5 million to open the Best Western Plus motel on Main Street in this city of 17,500 north of Portland, Ore….But Mr. Patel doesn’t own the Best Western anymore. Five years later, Mr. Patel still works the front desk with his wife, chats with the housekeeping staff and helps do laundry while making the morning rounds, much as family members have done at other motels nearby for two decades.The bank that lent him the money failed in 2008, and his loan was sold to one of the many investment firms specializing in buying distressed assets from the Federal Deposit Insurance Corp. in the wake of the financial crisis. The new owners of the loan demanded $3 million in repayment. Mr. Patel didn’t have it, so the owners foreclosed.”
“”We never missed a payment,” said Bhaskar Zaver, an immigrant from Zambia of Gujarati ancestry who borrowed $2.7 million from BB&T Corp. to buy a Microtel Inn in Lawrenceville, Ga. The loan was due to be refinanced last year when BB&T, of Winston-Salem, N.C., sent a foreclosure notice, demanding that he pay off the loan, he said. Revenue at the motel shrank to $400,000 last year from a peak of $1 million before the financial crisis, and its value has declined, but Mr. Zaver said he tapped his savings to avoid falling behind on the mortgage. He was about to refinance with a different bank when BB&T sold the loan for $800,000. The loan’s buyer foreclosed on the property, and the Microtel has been empty since March. He said he has lost about $750,000.”
“Over time, Patels became entrepreneurs in small cities and towns across America. Families often own or operate several properties, leaning on economies of scale to squeeze profits from the low-margin motel business. But the current turmoil threatens to undo all that hard work, some motel owners said. Banks are calling in some loans and are leery of financing construction of new motels because of economic uncertainty and concerns about the health of the commercial real-estate market.”
“Dr. Patel, 52, said he “cannot afford to file for bankruptcy,” adding that he already has sunk nearly $3 million into his motel properties. Columbia State Bank spokeswoman JoAnne Coy wouldn’t comment on the lender’s actions, though she said bank officials “recognize a lot of businesses are being challenged in today’s economy. Vijay Patel, a naturalized U.S. citizen born in Uganda, forfeited more than $150,000 in licensing fees on four properties after failing to find a bank willing to lend him money to build the motels. Mr. Patel, 55, said he never missed a loan payment since getting into the business in 1994.”
Full WSJ Story:
http://online.wsj.com/article/SB10001424052970203911804576653523797370668.html?KEYWORDS=patel
This story has it all.
This story also tells you everything you need to know about the arena hotel that will Not be built anytime soon.
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