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Hotel, restaurants planed for Statler
Business First
Larry Palaszynski was taking it all in with a mix of curiosity and concern.
The business broker has been a tenant of Statler Towers for 15 years - or, as he put it, "about 15 owners."
His company, Value Finders Inc., is part of what has become an increasingly small group: the remaining tenants in the historic but ailing landmark.
Palaszynski also was one of about 200 people to witness the end of one of the Statler's darkest periods - its ownership by BSC Buffalo Development LLC, an investment group headed by British investor Bashar Issa - and what many hope is the beginning of a new era. A new partnership headed by William Koessler, owner of Park Lane Catering, along with developer Richard Sterben and hospitality-industry insider Tom Zawadzki emerged as the winning bidder in a U.S. Bankruptcy Court-ordered auction. Park Lane Catering LLC's bid of $1.3 million for the 18-story building was the highest of two bidders.
The partnership is planning a $100 million revamping of the Statler that will include a brand-name hotel with 235 rooms, Class A office space and 111 apartments - all anchored by the Park Lane's operations. At least two restaurants, a coffee shop and jazz club are also in the works for the property. The development trio is negotiating with three brand-name hotel chains for the Statler.
"I suppose that's all good news," Palaszynski said.
But he, like so many others, is combining optimism with a big dose of skepticism. In recent decades, a number of prospective developers and owners have made similar pledges that were never fulfilled, leaving the building to deteriorate further and tenants to move elsewhere.
"That local people who we all know are buying (the Statler) gives me reason to stay put," Palaszynski said.
Sterben said renovations should begin this fall, perhaps as early as next month. He hopes to soon cut a deal with a hotel chain and have it open within 18 months. Other aspects of the development will be phased in, he said.
"To me, 18 months seems extremely fast for a Buffalo project," Palaszynski said. "But from my perspective, I'll know by then if these guys are for real or the deal is another bust. In fact, I suspect within the next nine months, I'll know if this is for real."
Issa, who bought the Statler three years ago, made a similar redevelopment pledge. He promised a $100 million facelift for the building, but just a sliver of that promise was delivered. He currently is facing legal and financial problems connected with his Statler venture, as well as development projects in Manchester, England.
It was those legal issues that forced the Statler into involuntary Chapter 11 proceedings by U.S. Bankruptcy Court Judge Hon. Carl Bucki and led to the much-anticipated auction last Wednesday. The ornate marble floors, where the likes of Elvis Presley, President John F. Kennedy and Marilyn Monroe once walked, were jammed during the auction with real estate insiders, developers, politicians and lawyers, as well as gawkers, on hand.
"I think all the advance publicity drew the crowds," said Morris Horwitz, the Amherst attorney whom Bucki appointed as Statler trustee.
"It helped a lot," added Garry Graber, a Hodgson Russ LLP partner and part of Horwitz's trustee legal team.
Tomorrow, Bucki will hear Horwitz's formal recommendation on the Park Lane Catering bid. A closing is anticipated by Aug. 28.
The days leading up to the auction were filled with anticipation and speculation. At the event, potential bidders were huddling in various parts of the Statler. Heads were bobbing in quiet conversation. Cell phones and BlackBerry devices were in constant use. Jockeying was clearly taking place.
"From a real estate perspective, this (auction) is probably the biggest thing to hit Buffalo since sliced white bread," said Eric Tudor, head of the Coldwell Banker Commercial Meridian real estate company and past president of the New York State Association of Commercial Realtors, Buffalo chapter. "It's safe to say that everyone is here to see what happens."
It was widely known that Koessler was part of a group very much interested in buying the Statler. He admitted that he had a vested interest.
The Park Lane, which caters everything from weddings to corporate events in one of three rooms inside the Statler, has more than 80 bookings left this year in the building and 40 on the books for next year.
Koessler said concern about the building's future caused him to lose more than $1 million in bookings.
"And who knows how many other weddings I lost because people just didn't call," he said.
Since moving his operations to the Statler five years ago, he has invested $1.5 million in upgrades to the kitchen and ballrooms to play up its 1920s opulence.
"There isn't another venue like this in Buffalo," Koessler said. "That's why I'm fighting so hard for it to survive."
Bookings and events at Park Lane operations there will continue.
Auctioneer Cash Cunningham said he was not surprised by the turnaround.
"Everyone in Buffalo has ties to this building," he said. "There is a sentimental factor. Everyone remembers it in one way or another."
Drama increased as bidders raised price
Within seconds, the buzz in the lobby of the Statler Towers turned church quiet as Cunningham read the legal requirements that preceded the court-imposed auction of the Buffalo landmark.
Clearly, the more than 200 people who crowded into the lobby were there to see who - if anyone - would be the successful bidder. They weren't going to get it for a song.
Privately, those involved in the auction said any bid less than $500,000 probably wouldn't be looked at kindly by U.S. Bankruptcy Court Judge Hon. Carl Bucki, who put the building into involuntary Chapter 11 protection, or the court-appointed trustees. That would have made an already murky future even more cloudy.
Yet before the clock struck 11:30, those fears were long-gone.
"It's good to see so many people interested in the Statler Towers," said Buffalo Mayor Byron Brown, who attended the event and pledged the city's support for the new owner. "We will do everything we can to make this project successful and work."
The auction, tense and gripping, began with Cunningham seeking a $1 million bid.
The response from 11 registered bidders?
Silence.
Cunningham kept dropping the price, each time prodding the bidders to make an offer. When the price fell to $400,000, he made a plea.
"There will come a time, I believe, when you pass by here with your child or grandchild and say, ‘I could have had this building for $400,000, and I passed,' " he said.
Only when the price dropped to $300,000 did the first bid come in - this one from the eventual winner: Park Lane Catering LLC.
Gail Pirinzi, who attended with an associate, both clad in matching cowgirl outfits, responded with a $400,000 bid. Pirinzi, who declined to be interviewed, is believed to have represented a joint venture of local and out-of-town interests.
With that, the bidding war that many expected began.
In the next few minutes, Park Lane Catering and Pirinzi volleyed 23 times before Park Lane's $1.3 million bid ended the action.
The big question was this: Were people nervous when, at $300,000, bidders were slow to respond?
"For a minute," admitted Morris Horwitz, the court-appointed trustee.
"I think the bidders just needed to heat up," Brown said.
-James Fink