Tampa philanthropist-developer Kiran Patel mired in Pittsburgh hotel deal
Wake up and good morning. When it comes to Tampa Bay area philanthropy, Kiran Patel's ranked among the very elite for years. In addition to the USF-based Kiran C. Patel Center for Global Solutions, a not-for-profit organization focused on funding global health solutions, the Patel Foundation's commitments include Tampa's Dr. Pallavi (Kiran's wife) Patel Performing Arts Conservatory and support for rural health clinics and disaster relief. (Photo: Kiran and Pallavi Patel, St. Petersburg Times photo by Kathleen Flynn.)
Patel, a former cardiologist and business entrepreneur, also has been active as a real estate developer in the area, though some projects have been waylaid by the deep recession. So it may come as a surprise to some that Patel is heavily involved in an increasingly controversial deal to try buy the former Hilton Hotel in downtown Pittsburgh. Patel estimates that he is owed $3.7 million for loans he advanced to the hotel to help keep it afloat and is now seeking to gain control of the property in order to protect his investment. (Hilton photo: courtesy of Shubh Hotels.)
In an Oct. 29 story -- headlined "Doctor admits foolish acts in financing former Hilton" -- the Pittsburgh Post-Gazette reported Patel admitted to making mistakes in his dealings with Jai Lalwani, the CEO of Black Diamond Hospitality and who once served as the hotel's asset manager.
Local Pittsburgh coverage states the 712-room hotel is the city's largest and arguably most prominent, but has been hobbled in recent years by an owner with financial problems. Shubh Hotels Pittsburgh LLC filed for bankruptcy in September after BlackRock Financial Management, its lender, sought to foreclose on the property after claiming the owner defaulted on its $49.6 million mortgage. Shubh reportedly also transferred all equity in the hotel to Patel.
Enter Patel. In September, as part of his offer, Wyndham Hotels & Resorts expressed an interest in replacing the Hilton name with its own Wyndham Grand brand and an upgrade to four-diamond status. Read more from the Pittsburgh Post-Gazette here. The hotel has been known since Sept. 2 as the Grand Pittsburgh Downtown after Hilton terminated its franchise.
The Pittsburgh Tribune Review reports Patel testified for several hours last Thursday in the bankruptcy case that should decide the hotel's future. Patel testified he made a series of loans to the former Pittsburgh Hilton as a financial crisis threatened to close the region's biggest hotel, while mortgage holder Blackrock "didn't discourage" him -- and now wants to seize the property. Patel claims Blackrock was not willing to risk any of its own money to shore up the financially struggling hotel, relying on a "fool like me to do it. That I am bitter about."
"I am the victim in this circus," Patel said, according to the Post-Gazette. "The only person who lost money is me. I'm the sole supporter of this asset in this crisis."
Under questioning by his attorney, James Gassenheimer, Patel said he came to know Lalwani through his father in the close-knit Indian community in Tampa. The Post-Gazette report said Patel ended up not only lending him $3 million for a business venture in Tampa but personally guaranteeing up to $5 million of the first mortgage to the State Bank of Texas.
Patel testified the Lalwanis also introduced him to Shubh principal Atul Bisaria. At the time, the hotel needed $300,000 to $600,000. As time went on, Patel said he got "sucked ... deeper into the situation," and ended up providing much larger amounts as loans. He said he did so in hopes that the hotel would turn around and he eventually would be able to get his money back.
Yikes. We'll keep track of Patel's Pittsburgh difficulties in upcoming posts.
-- Robert Trigaux, Times Business Columnist