Morton Sarubin, the developer of the luxurious Peabody Court Hotel, quietly sold it last month for $8.1 million to Metropolitan Commercial Properties Inc. of Baltimore.
The new owner is a private company formed in 1990, and the 104-room hotel at 612 Cathedral St. is its first acquisition. Grand Heritage Hotel Co. of Annapolis, the company that has managed the hotel since 1989, will continue to manage it and plans no major remodeling or staff changes, according to Grand Heritage Chairman John Cullen.
Mr. Cullen described Metropolitan as a "private enterprise set up for the purpose of hotel acquisitions" and said Grand Heritage is its sole agent. He said funds for the acquisition come from Sovran Bank/Maryland.
Sovran was also the institution that served as the primary lender for the $12 million hotel project, which Mr. Sarubin and then-partners Georges and Danielle Mosse opened to great fanfare in 1985. The Mosses sold their 50 percent interest in the hotel in 1987, after claiming in a lawsuit that it was losing $200,000 a month and that Mr. Sarubin was not paying his share of the hotel's debts.
Mr. Sarubin could not be reached for comment, and a hotel spokeswoman said he longer had an office there. Sovran representatives also could not be reached.
Mr. Cullen said the Feb. 18 sale was not a case of the bank taking control of the hotel in lieu of foreclosure, as with Maryland National Bank's successful attempt last fall to have a receiver appointed for the Sheraton Hotel in Towson after its owner fell behind in loan payments.
Mr. Cullen said Metropolitan was an independent hotel acquisition company that has been working for some time with Grand Heritage and others he could not name. Grand Heritage, he said, has an "incentive" arrangement with Metropolitan that gives Grand Heritage a chance to gain an ownership interest in the Peabody Court depending on how successful it is in managing it.
Mr. Cullen said Mr. Sarubin walked away with a profit after the sale, which worked out to $77,884 per room.
"Mort is happy," he said. "Mort had a good chance to go home with all his obligations from the hotel released and some money left over. . . . He made a profit after much hard work."
Mr. Cullen added that the sale has been in the works for six or seven months and that it wasn't deterred by the Persian Gulf war, which has generally hurt hotel bookings.
"We had enough confidence in the hotel that the price didn't change [as a result of the war] and we weren't going to renege on it because of any short-term fluctuations in the market."
Other hotels operated by Grand Heritage include the Historic Inns of Annapolis, a four-building collection of small hotels with a total of 134 guest rooms; the Union Station hotel in Nashville, Tenn.; the Pontchartrain Hotel in New Orleans, La.; the Brazilian Court in Palm Beach, Fla.; and Harbour Towne Golf Resort in St. Michael's.
Created inside the shell of an apartment house built in 1924, the Peabody Court has a four-star rating from the American Automobile Association and a four-diamond rating from Mobil Oil. Many Baltimoreans know it for its posh rooftop restaurant, the Conservatory, which has an unobstructed view of the Washington Monument.
Mr. Cullen said that the hotel caters mainly to corporate groups holding meetings, high-end business travelers and weekend pleasure travelers "who really want to be pampered." He said that Grand Heritage has worked for the past two years to improve the hotel's occupancy rating, which he said was 67 percent in 1990 and 73.3 percent in February. The company's goal is to have an average occupancy rate of 71 percent this year.
"We have a good solid business, and we're going to do even better in 1991," he said. ""We've turned it around to a point where it is breaking even and now we're looking to ride it into profitability."
Mr. Cullen added that part of the recent increase in business at Peabody Court may be due to the Jan. 1 closing of the Belvedere Hotel at Charles and Chase streets.