Newstrack: Cedar Rapids hotel sold to Tennessee bank

Background

Synergy Hotel Group of Glenwood, Md., owner of the Clarion Hotel and Conference Center in Cedar Rapids, filed for Chapter 11 bankruptcy in August. The 33-page filing in U.S. Bankruptcy Court for the Northern District of Iowa lists assets of $3.8 million and liabilities of $8.8 million, including $7.9 million of secured claims and $900,000 of unsecured claims.

What's happened since

The 157-room hotel was sold Feb. 3 at a Linn County sheriff's auction for $4 million to Citizens Bank of Elizabethton, Tenn., which held a $4.5 million first mortgage on the property at 525 33rd Ave. SW.

The Clarion has continued to operate under the bank's receivership and, more recently, ownership. A spokeswoman at Citizens Bank declined to comment on plans for the hotel on the advice of the bank's attorney.

The Clarion was constructed in 1976 by Zazza Ltd. as a Sheraton Inn and kicked off what became 'motel row” on 33rd Avenue SW. Synergy, owned by Fritsch Family of Partners LLC, bought the Clarion in 2007 from Zazza Ltd., owned by the family of the late Jack Zazza.

Terms of the sale were not disclosed.

Charlie Fritsch, president of MBA Hotel Brokers in Glenwood, Md., and majority partner in Synergy Hotel Group, said the company planned to invest $500,000 to upgrade the hotel's banquet rooms, landscaping and lighting, public areas, restaurant and bar, guest rooms and pool area.

The Clarion has a storied history, with the University of Iowa regularly housing its football players as well as opposing team players at the hotel before games. It was the first hotel of significant size to be built after the Roosevelt Hotel was constructed in 1926 in downtown Cedar Rapids.

In addition to the Citizens Bank first mortgage, the U.S. Small Business Administration held a second mortgage for $1.8 million, and Zazza Ltd. held a third mortgage for $1.3 million.

The Feb. 3 sheriff's sale effectively canceled the SBA and Zazza Ltd. claims