After seizing over $9 million in unpaid Bel-Aire Hotel loans, the lender has taken over ownership of the historic gated property near Près Isle State Park in Millcreek Township.
Whether the lender is able to sell the Bel-Aire and recoup its investment is an open question, adding to the uncertainty surrounding the future of the once vibrant resort.
The lender, HDDA LLC, of New York, bought the Bel-Aire at a Friday sheriff’s sale at the Erie County Courthouse. HDDA submitted the only offer — $468,306 in fees and taxes. Bidding started at this amount.
HDDA’s purchase, known as the Credit Offer, means he assumed the full amount of outstanding loans that led to HDDA seizing the Bel-Aire and forcing the sheriff’s sale. The amount seized was $9.4 million, according to court records. Records show that the COVID-19 pandemic caused some of Bel-Aire’s financial problems.
HDDA will lose money if it fails to sell the Bel-Aire for more than $9.4 million on the open market. An HDDA attorney, Matthew Simons of Pittsburgh, made the offer on behalf of HDDA at the sheriff’s sale. He declined to comment on what HDDA plans to do with the property.
The lack of bidders was not unexpected. A successful bidder would have had to bid several million dollars for HDDA to abandon the bidding process and let another owner claim ownership.
The Schwab family, founder of Bel-Aire, no longer has an act
With its purchase at the Sheriff’s Sale, HDDA took over the deed to the 131-bedroom Bel-Aire from its original owner, Kertra Ltd., who also borrowed the $9.4 million from HDDA. Kertra’s president is Fairview resident Kerry Schwab.
The Schwab family owned the Bel-Aire for 60 years, and the resort’s hotel and restaurant have long been popular among foreigners and Erie residents.
The Bel-Aire has been closed since May. HDDA, which specializes in hotel real estate, filed for foreclosure in March 2021 due to Kertra’s non-payment of three loans plus interest totaling $7.7 million, the largest of the three being $6.1 million, including interest, according to court records. The outstanding amount turned into a judgment that reached $9.4 million.
Instead of immediately executing the judgment and forcing a sheriff’s sale, HDDA asked a court-approved receiver to take over the operations and management of the Kertra property. On April 6, 2021, Erie County Judge Daniel Brabender approved the appointment of the receiver – Maryland-based Marshall Hotels & Resorts Inc., a third-party hotel management company.
The pandemic has damaged Bel-Aire’s business
Asking Brabender to approve a receivership for the Bel-Aire in 2021, HDDA said in a filing that “a receivership is desperately needed to manage and maintain the mortgaged property and to collect all rents, issues and profits. numerous issues, including but not limited to the effect of COVID on the hospitality industry, necessitate the appointment of a receiver on an expedited basis.”
The receiver ran the Bel-Aire and tried unsuccessfully to sell it on the open market. When no sale occurred, the Bel-Aire closed in May and HDDA continued with the sale of the sheriff.
The Bel-Aire is located at 2800 W. Eighth St., just east of Peninsula Drive and just south of the Almost Isle State Park entrance. The Bel-Aire sits on 5.35 acres and the resort covers 89,263 square feet. It includes an indoor swimming pool, a restaurant, known as Maxi, and rooms inside and outside the main hotel.
The Bel-Aire’s demise comes as the Township of Millcreek continues its efforts to improve the area near West Eighth Street and Peninsula Drive to turn it into a gateway to Près Isle State Park.
The Bel-Aire has changed its affiliations over the years. It was formerly affiliated with Clarion and more recently with Wyndham, the owner of Ramada. The Bel-Aire remained independently owned during affiliations with national hotel chains.
In late 2018 and early 2019, the Bel-Aire, then the Bel-Aire Clarion Hotel, underwent $2 million renovations. The pandemic hit about a year after the renovations were completed, and the Bel-Aire’s financial problems intensified.