Ex-owner of defunct Bel-Aire Hotel loses his other Millcreek hotel at sheriff's sale
A sheriff's sale has ended a local family's longtime ownership of hotels in the Erie area and has left a bank with a property saddled with more than $5 million in unpaid loans.
The SureStay Plus Best Western Erie Presque Isle, which is still in business at 3041 W. 12th St. in Millcreek Township, was sold at a sheriff's sale on Friday at the Erie County Courthouse.
The sale came after a company of the hotel's owner, Kerry Schwab, defaulted in September 2021 on a mortgage of $4.9 million — an amount that has since reached $5.6 million, according to information presented at the sale. The original amount of the loan was $4.2 million when it was issued in 2017, according to court records.
Financial collapse: Ex-owner of defunct Bel-Aire Hotel to lose 2nd hotel through foreclosure, sheriff's sale
Schwab and his family also owned the Bel-Aire Hotel, at 2800 W. Eighth St. in Millcreek. It went out of business about a year ago and was sold at a sheriff's sale in November.
The Millcreek General Authority, an agency related to the township, bought the Bel-Aire months later with plans to sell to a developer to revitalize the West Eighth Street corridor near Presque Isle State Park as part of the township's new Gateway District.
Schwab blamed the pandemic for the financial collapse of both hotels, according to court records.
In the case of the SureStay Best Western, the lender, Promise One Bank, of Duluth, Georgia, was the only bidder at the sheriff's sale. It purchased the property for $397,642, which represented the costs and property taxes.
What will happen next to the Best Western on West 12th Street?
Promise One bought the SureStay in what is known as a known as a credit bid. The bank took on the full amount of the outstanding loans that led it to foreclose on the property and force the sheriff's sale.
Now that it owns the property, Promise One could try to seek a buyer and recoup as much of its outstanding loans as possible through a sale.
The lawyer who represented Promise One at the sheriff's sale, Michael Nies, of Erie, said he was retained only to handle the sale and had no information on the bank's plans. The Philadelphia-area lawyer who filed the mortgage foreclosure for Promise One, Lyndsay Rowland, also said she had no information on the bank's intentions.
What was the Schwab family's history with hotels?
The owner of the SureStay hotel had been Schwab Realty Corp., whose president is Kerry Schwab, 76, of Fairview. He is also the president of Kertra Ltd., which owned the Bel-Aire.
In 1994, Schwab Realty built the three-story, 45,414-square-foot hotel on West 12th Street — the hotel that is now the SureStay. It was formerly a Comfort Inn and a Hampton Inn.
The building sits on the 3-acre property where the Schwab family operated its first hotel.
That hotel was the original Bel-Aire. In 1961, according to property records, Clem Schwab, a former pharmacist, and his wife, Elaine, took over sole ownership of the property, then called the Bel-Aire Motel. The Schwabs, who are both deceased, are the parents of Kerry Schwab.
The Schwabs renamed the original Bel-Aire the Bel-Aire South in 1969. The name change came after the family that year purchased the Presque Isle Motel, on West Eighth Street east of Peninsula Drive, and renamed it the Bel-Aire North.
The family later bought the Seaway Motor Lodge and a group of offices, all on the same block on West Eighth Street near Peninsula Drive. The Schwabs spent $4.5 million in 1983 to combine all the properties with the Bel-Aire and change the motel to a hotel.
How did the Schwabs' hotels end up in foreclosure?
In court filings, Kerry Schwab's lawyers said the Bel-Aire and the SureStay Best Western became financially unstable during the pandemic.
The properties struggled despite Kertra, the Schwab company that owned the Bel-Aire, receiving nearly $580,000 in federal Paycheck Protection Program loans to help the Bel-Aire operate during the pandemic, according to PPP data.
It received a $336,311 loan in February 2021 after receiving a $243,408 loan in April 2020, according to PPP data. The April 2020 loan was forgiven in September 2021. The status of the February 2021 loan is not identified in the public database of PPP loans maintained by GoErie.com at data.goerie.com. Schwab Realty received no PPP loans, according to the database.
Another Schwab company, Schwab Hotel Corp., received $75,000 in federal pandemic-related CARES Act aid that Erie County administered, according to county records. Schwab Hotel Corp. also received a $54,400 PPP loan. That loan is listed as forgiven.
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The mortgage holder for the Bel-Aire was HDDA, of New York City, which specializes in hotel real estate. It foreclosed on the 131-room property after Kertra defaulted on about $9.4 million in loans.
At a sheriff's sale on Nov. 18, HDDA bought the Bel-Aire in a credit bid for $468,306 — the amount due in costs and taxes. In its deal with the Millcreek General Authority, HDDA in January agreed to sell the property to the authority for $4 million. The sale was final in March.
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The sale left HDDA with a loss of more than $5 million on the loans of $9.4 million.
Contact Ed Palattella at epalattella@timesnews.com. Follow him on Twitter @ETNpalattella.
This article originally appeared on Erie Times-News: Ex-owner of defunct Bel-Aire has 2nd hotel sold at sheriff's sale
