The Niagara County Industrial Development Agency Tuesday cleared the way for the sale of two Niagara Falls hotels owned by Rado-Mat Holdings U.S. Inc.
The Clarion Hotel, 300 Third St., which until Nov. 1 was known as the Radisson Hotel, and the Holiday Inn, 114 Buffalo Ave., are to be sold to Servico Hospitality Inc. of West Palm Beach, Fla., for an undisclosed amount, said Michael A. Gold, attorney for Rado-Mat.
At a brief special meeting, the IDA board approved the transfer of $6,155,000 worth of bonds on the 400-room Clarion Hotel from the current bondholder to a new one selected by Servico.
The bonds, which were held by ORIX USA Corp., will be transferred to Lehman Brothers, the firm selected by Servico. The existing first mortgage on the Clarion will be retired and a new one, with the same principal as the bond amount, will be drawn up.
A second mortgage will then be taken out on the hotel with Lehman Brothers, for about $4 million.
With an $8 million bond issue, refinanced over the years, the IDA helped Rado-Mat buy the Clarion in 1987, when it was the Hilton Hotel, but was threatened with losing its franchise.
The Clarion, which is technically owned by the IDA by virtue of the bond issue, is receiving a property tax break and will continue to do so.
However, the Holiday Inn will return to the property tax rolls, since the deal calls for the IDA bonds on that 201-room hotel to be retired, according to IDA attorney George W. Cregg Jr.
Gold said it was "highly unlikely" that Servico would ask for any further IDA assistance on the Holiday Inn. The IDA issued $9 million worth of bonds for that hotel in 1988.
Servico, with $625 million in assets, is a rapidly growing nationwide hotel company. It owns or manages 71 hotels, comprising more than 14,500 rooms, in 23 states and Canada.
Before the deal with Rado-Mat, which is tentatively scheduled for a Jan. 8 closing, Servico has bought 12 hotels and increased its ownership stake in three more this year. Among the purchases was the 150-room Holiday Inn in Jamestown, which was announced Nov. 11.
Gold said Rado-Mat will continue to own the Grand Island Holiday Inn and the Minolta Tower in Niagara Falls, Ont. Officials from Rado-Mat and Servico did not return telephone calls for comment on the deal.