The fate of downtown Jackson landmark the Edison Walthall Hotel could be decided through an online real estate auction May 22.
Auctioneer Benny Taylor indicates a bargain is in the making on the sale of the eight-floor hotel, closed down since early 2010 after burst water pipes extensively damaged the lower floors. Sellers “are very motivated,” Taylor said to the various prospective bidders who toured the 225 Capitol St. property Tuesday.
“When they start getting me involved, they are looking for money,” Taylor said of the sellers.
Tax records put the appraised value at $3.79 million, though its assessed value for tax purposes is $569,261. St. Louis-based Roberts Hotel Group tried unsuccessfully to have the 205- room hotel included in a bankruptcy filing. When that failed, the property landed with Lee Katz, an Atlanta specialist in finding buyers for distressed properties.
His job was to recover as much as possible of the $7.5 million owed bond holders. “We had some interest,” he said this week. “We negotiated a couple of contracts, but we decided after we got court approval to hold an auction that this would be the best way to get this to a concluding point.”
Katz has been the court-designated receiver of the hotel since last fall.
Taylor, of Taylor Real Estate Auctions, said the auction will require a minimum bid but he could not disclose the amount. He said he has advertised the more than 100,000-square-foot hotel and its four-level, 200-space parking garage extensively in recent weeks. That’s brought a 15 percent to 20 percent increase in interest, he said.
The auction includes all furnishings in the hotel, Taylor said.
The building opened in 1927 as a three-story bakery. Owners converted the property to a hotel in 1928 by adding five floors. Named for Civil War figure Edward Cary Walthal, the hotel has undergone a series of makeovers through the decades, as hotel styles changed, including an incarnation in the 1960s as a motor court with a swimming pool atop the garage.
The Roberts Group, owners of Jackson TV station CW34 and radio station 97.7FM WRBJ, bought the hotel in 2008 with plans to invest $10 million in upgrades. The Roberts put about $7.5 million into renovations of some of the top floors before the water damage forced them to shut down the hotel.
Taylor, the auctioneer, expects the Walthal’s next incarnation will be as a condominium or residential apartment building. “It’s going to need a complete restoration,” he said.
David Watkins, who successfully restored Jackson’s King Edward Hotel after it had been closed for many years, said he agrees the new owner must do a complete overhaul.
“A lot of remediation must take place,” Watkins said in an interview. “All the material would have to be stripped out” of the damaged floors.
As a hotel, the Walthall might have success as an extended stay property with perhaps some permanent apartments included, according to Watkins.
The operational costs would be lower than with a conventional flag hotel, he noted.
“The other use I think would be residential. I know you would be able to rent them out,” said Watkins, whose King Edward and neighboring Standard Life buildings have 140 rental units that are at 97 percent occupancy.
Downtown has about 400 rental apartments that are at “virtually 100 percent occupancy,” he said, adding demand could accommodate a few thousand more.
“There is a need for downtown living,” he said.
Watkins said whoever gets the Walthall needs to pick it up cheap because the costs that lie ahead will be significant.
“I wish them luck,” he said.
Malcolm Shepherd’s Jackson-based Full Spectrum South could be among the bidders. “There’s no doubt there’s an opportunity there,” said Shepherd, who has toured the building with several other Full Spectrum representatives.
“The tragedy is that it’s falling into disrepair,” added Shepherd, Full Spectrum South’s development director.
He does not see the Walthal as viable to return solely as a hotel. “What you’re looking at is a mixed-use building that has some retail application,” he said, suggesting that a mix of rental apartments and hotel rooms may work on the upper floors.
“The challenge for developers is to make it profitable as a development opportunity,” he said. “The key is to figure out the right mix.”
Shepherd said the Full Spectrum South construction specialist who accompanied him on Tuesday’s tour declared the building structurally sound.
“We were impressed,” he said. “We’re taking a serious look.”