Downtown Portland Hilton hotel properties appear headed for foreclosure auction

The landmark Hilton Portland Downtown could be auctioned off on the steps of the Multnomah County Courthouse this month.

The owner of the Hilton and the nearby Duniway Portland, also a Hilton hotel, defaulted on its $240 million mortgage loan in May 2021, the lender claims in property records filed with the Multnomah County recorder. The Hilton and Duniway, at 921 S.W. Sixth Ave. and 545 S.W. Taylor St., together have 782 rooms, making them the largest hotel property in the city.

Several blocks away from the Hilton, the Dossier hotel is in a similar jam. The owners of the Dossier, at 750 S.W. Alder St., failed to make mortgage payments from March 2021 to May 2022, its lender claimed.

The Dossier is part of Provenance Hotels, the local boutique hotel chain owned by Gordon Sondland and Katherine Durant. The lender wanted to sell the property at public auction in November, but an attorney for Sondland says he’s reached a restructuring agreement with his lender.

The defaults were first reported by Willamette Week.

The pandemic devastated the hospitality business all over the world. Occupancy fell to zero for most hotels in the first months of COVID-19.

The slow return to normalcy has boosted travel and tourism in 2022. State officials were counting on the World Athletics Championships in Eugene to give the entire state a boost.

But Portland hoteliers have faced the additional complications posed by the deterioration of the city’s once bustling downtown and a steep collapse in business travel that still hasn’t reversed itself.

THI VI Portland LLC and THI VI Portland Lessee LLC, both based in Delaware, own the Portland Hilton and the Duniway. Those two companies, in turn, are controlled by Brookfield Asset Management, a large New York-based investment firm.

Brookfield could not be reached. It purchased the two properties in 2015. Its lender sought to schedule a foreclosure auction for next Tuesday.

The “aggregate amount” owed by the Dossier’s parent company is $63.2 million, according to property documents filed at the Multnomah County Recorder’s Office.

Since that notice of default was filed, Provenance and its lender have reached a settlement deal, the company’s attorney said.

“Provenance has reached an agreement with LNR Partners on loan modification terms and is in the process of closing the Dossier deal, which will bring the loan current,” said Jim McDermott, longtime lawyer for Sondland and Provenance. “There will be no foreclosure of the hotel’s property.”

“Provenance has been attempting to resolve this loan with LNR Partners for two years,” McDermott added. “Provenance has always had the funding to bring the loan current. “

The default prompted questions about whether it might kill the tentative merger between Provenance and Benchmark Pyramid, a large Boston-based hospitality firm.

McDermott said Wednesday that the merger will go forward. “All of Provenance’s other properties are in good financial standing after satisfactorily resolving issues with all other lenders, and Provenance’s transaction with Benchmark Pyramid is proceeding as planned.”

— Jeff Manning; [email protected]

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