The Four Seasons Hotel and Private Residences at the foot of Canal Street is facing financial struggles nearly three years after opening as New Orleans’ premier luxury hotel and condominium complex, forcing its owners to seek additional investor cash in an effort to avoid having to sell the property.
According to documents sent to investors in February, Massachusetts-based Carpenter & Co., the main developer of the project, is in default of a loan agreement with its mortgage lender. The developer has been instructed by its senior lender, New York-based Madison Realty Capital, to look for new funding from investors or prepare to sell.
New Orleans developer Paul Flower, whose Woodward Interests is a local partner in the project, said that the Four Seasons owners are “seeking commitments for additional capital” from current investors and are negotiating with their lender on a plan that would change the loan terms.
The new Four Seasons Hotel New Orleans viewed through an archway at The Outlet Collection Riverwalk in New Orleans alongside the Mississippi River on Friday, January 21, 2022. (Photo by Chris Granger | The Times-Picayune | The New Orleans Advocate)
He said the building is not currently being marketed for sale, adding that “the situation is continuing to evolve.”
“The entire project team is working hard to achieve the best results for our stakeholders and the city of New Orleans in a difficult time and situation,” Flower said.
The $564 million redevelopment of the former World Trade Center into the Four Seasons began in 2018 and was completed in 2021. Though delayed for years by complicated negotiations and legal fights, the project was touted as an important achievement of former Mayor Mitch Landrieu’s administration as it sought to improve the riverfront and attract wealthy investors to the city in the decade after Hurricane Katrina.
Financial troubles at the high-profile property could be a major setback in the city’s efforts to recover from the pandemic and bring high-end business and leisure travelers back to the city.
The sommelier table is a wine tasting area inside the Miss River restaurant at the Four Seasons New Orleans.(Photo by Chris Granger | The Times-Picayune | The New Orleans Advocate)
The New Orleans Building Corporation, the city agency that technically owns the 33-story building, is “aware that the developer is negotiating with the lender,” according to executive director Cindy Connick, who said she was confident “any lender issues will be successfully resolved.”
The developers are current on their lease obligations to the city, which totaled $3.8 million this year, she said.
Representatives of The Four Seasons national hotel chain did not respond to a request for comment. Carpenter & Co. also did not return requests for comment.
Colorful history
The former World Trade Center building, which opened in 1967 as the International Trade Mart, was once the center for global trade in a city whose port was among the nation’s busiest. But as the New Orleans economy faltered, the building gradually lost its luster and, eventually, all of its tenants.
In 2010, it was considered for demolition. Instead, the city launched a competitive bid process to redevelop it. The Woodward-Carpenter group was ultimately selected, though an unsuccessful lawsuit by one of the failed bidders slowed the project’s 2018 groundbreaking by two years.
Red flags
The hotel opened in July 2021, toward the end of the pandemic, though the luxury condominiums and penthouse suites — which were marketed for sale at between $7 million and $10 million — were completed months later. By then, interest rates had more than doubled and construction costs had skyrocketed.
In October, a group of wealthy foreign investors who, collectively, invested more than $50 million in the project, were notified that the Four Seasons project had been “adversely affected by conditions currently affecting the real estate industry nationally and worldwide” and that, “the developer has been unable to improve net operating income of the hotel or sell enough residential condo units.”
Fireworks frame the Four Seasons New Orleans on Wednesday, Nov. 17.
The letter, sent from Pathways EB-5, a Florida company that raises money from foreign investors, went on to say that “the developer claims it is facing serious financial challenges with respect to the project and limited options to improve its short-term finances.”
In February, Pathways CEO Jeff Campion sent another letter to the investors saying the project’s “cashflow remains strained,” and that “the lender instructed the developer to begin the process…to both search for outside capital and market the property for sale.”
Flower said some of the information in the letters is outdated and that the property is not currently on the market.
Pathways did not respond to multiple voice messages and emails requesting comment.
Madison Realty Capital declined to comment.
Manhattan prices
Flower said the Four Seasons’ financial difficulties resulted from a slow convention season in 2023, which drove down the city’s hotel occupancy, and challenges selling the remaining one-third of the building’s pricey condos.
The luxury apartments are for sale at $1,500 per square foot, more than twice the going rate for other high-end downtown condos.
Flower said the Four Seasons hotel is “doing well” compared to its local competitors and that occupancy rates and revenue per room are “improving steadily,” though he declined to provide specific data from the hotel.
With respect to the 91 condos, two-thirds of the building’s units have been sold, according to public records. Those include several high-profile sales to local celebrities like Drew Brees and Sean Payton, as well as the record-setting $13 million sale of a penthouse unit in 2021 to retired businessman Boysie Bollinger, who has since put the penthouse back on the market for $19.5 million.
Miss River is a grand restaurant for contemporary Louisiana flavors at the Four Seasons New Orleans.(Photo by Chris Granger | The Times-Picayune | The New Orleans Advocate)
Currently, 33 units — including seven of the penthouses and many of the larger, three-bedroom units remain unsold. Together, their square footage represents more than 82,000 square feet — about half the total residential space in the building.
With an asking price more than twice the market average and annual condo fees of $25,000, many local brokers said that the project could be hard-pressed to find the kind of high rollers willing to pay Manhattan prices for a place in downtown New Orleans.
Flower said he is heartened by recent trends that point to improvements in the city’s tourism and convention business, as well as decreases in crime.
“Projections indicate that the New Orleans convention environment will improve in the coming years,” he said. “We are hopeful that recent initiatives to reduce crime will be successful and the city has major tourism events like the Super Bowl on the horizon.”
