BofA has OK to put up Ritz

Style™ · January 11th, 2006, 01:38 AM

Bank of America Corp. has received permission from federal bank regulators to build a planned Ritz-Carlton Hotel next to its Charlotte headquarters, stirring concern that banks could expand their role in the real estate business.

The bank needed approval because a national bank is only allowed to buy and hold real estate for "the transaction of its business." Ritz-Carlton will operate the 150-room luxury hotel, but Bank of America will own it.

Although banks are known for prominent buildings housing their own operations, regulators want them mostly providing capital to outside businesses and developers. They also don't want banks engaging in real estate speculation.

The bank told the Office of the Comptroller of the Currency it should be allowed to develop the $60 million hotel because it plans to use more than 50 percent of the occupied rooms for lodging out-of-town employees, directors, vendors and others, according to postings on the OCC's Web site.

The 15-story hotel will reduce lodging expenses and provide a better visitor experience, the bank said.

The agency approved the Bank of America project in an "interpretive letter" dated Dec. 5, citing the hotel's use by bank visitors.

On the same day, the OCC also approved Pittsburgh-based PNC Financial Services Group Inc.'s involvement in a $170 million office/hotel complex.

OCC spokesman Kevin Mukri said banks often seek similar approvals on a variety of issues. The rulings "won't lead to an expansion of national bank real-estate powers," he said, noting the letters spoke to "specific fact situations."

Bank of America spokesman Terry Francisco declined to comment about the ruling beyond the letter.

The rulings, however, worry the real estate industry, which has long opposed banks treading on its turf.

Steve Cook, a spokesman for the National Association of Realtors, said the projects were the largest to receive such approvals.

"We're very concerned about regulatory permission that allows federally chartered banks to engage in activities not previously allowed," he said. "Our concern is this is a very short step into real estate brokerage and property management."

The industry fears unfair competition from banks and the increased mixing of commerce and finance, Cook said.

Since 2001, the association has successfully fought proposed Treasury Department rules that would allow banks to enter the real estate brokerage business.

Bert Ely, a banking consultant based in Alexandria, Va., said national banks are big enough to handle the risk of large projects and are experienced in commercial real estate lending. But he expects regulators to watch the issue closely.

"You may see more (projects), but I don't think it will come quickly," Ely said.

Bank of America plans to break ground on the hotel at the corner of North College and East Trade Streets in late spring or early summer, with completion expected in the fall of 2008, Francisco said. The bank has not named a contractor.

Wachovia Corp., Charlotte's other big bank, also is in the midst of developing a big uptown real estate project, which includes an office tower, condominiums and arts facilities.

A Wachovia spokeswoman said she could not immediately comment on whether OCC approval was needed but noted the planned arts facilities would ultimately be owned by the city of Charlotte.

The OCC declined to comment.

iamnorthcarolina · January 11th, 2006, 08:03 PM

Do you think that BOA using half of the hotel for its own use will hurt other uptown hotels. I am sure that a large part of hotel use today is for BOA visitors to the headquarters. I would think that the Ritz's close proximity to BOA headquarters will likely most hurt Westin and the Adams Mark as they are further walking distance from HQ and from Uptown dining and shopping options.

Justadude · January 11th, 2006, 08:11 PM

^ Naturally, more competition (especially Ritz-quality competition) will hurt other hotels. But I don't think this is something that will seriously damage the profit lines of Westin or Adam's Mark. Ritz is clearly a step up in quality and price from those hotels, so they're going to aim for a slightly different demographic in the first place. As far as BoA using it as their hotel of choice, it might make a small dent in others' profits but again, they're not going to put any old middle-management shmoe in the Ritz.

In the long run, this should actually help other hotels in the area. The growth of the hospitality sector, and the presence of a top-flight hotel in the middle of the city, will help attract the kinds of events and relocations that boost business for everyone.

uptownliving · January 11th, 2006, 08:36 PM

Well with Wachovia starting construction on a 1M sq ft tower and hopefully the NASCAR HOF coming online the hotels will have plenty to go around.

Style™ · January 12th, 2006, 01:30 AM

exactly.

bank of america used to own the double tree in uptown. however, i have a feeling that they'll have more than just 'half' that hotel in town at some times. so they will ship some people off to other hotels that will not cost them as much. maybe not. but that's just a guess.

oresaw · January 12th, 2006, 03:34 AM

I think most people coming into town for business purposes with BofA are staying at the Omni right now due to its proximity to all of BofA's buildings instead of the Westin or Adam's Mark. I think the new Ritz's BofA clientele will be 1)visiting BofA employees who otherwise would have gone to the Omni or 2)guests specifically invited by BofA who are staying in town on the bank's dime, I think this category is rare and still is more likely to put a slight dent in the Omni's business but not much.
As far as people coming to do business with BofA from other company's, those people will be traveling on their own companies dime and it is unlikely that their company will be willing to pay Ritz prices for a middle management level business traveler, those people will still be in other area hotels. Just because someone from out of town has business with the bank doesn't mean they will be at the Ritz, I think it's all in who's footing the bill.

norm21499 · January 12th, 2006, 04:42 AM

The Adams Mark is basically closed now anyway

uptownliving · January 12th, 2006, 04:51 PM

Norm are you working for a development company these days? I notice you have the inside track on information now.

January 11th, 2006, 01:38 AM	#1
Style™ King of the Queen Join Date: Sep 2002 Location: Charlotte, NC Posts: 2,146 Likes (Received): 0	BofA has OK to put up Ritz Bank of America Corp. has received permission from federal bank regulators to build a planned Ritz-Carlton Hotel next to its Charlotte headquarters, stirring concern that banks could expand their role in the real estate business. The bank needed approval because a national bank is only allowed to buy and hold real estate for "the transaction of its business." Ritz-Carlton will operate the 150-room luxury hotel, but Bank of America will own it. Although banks are known for prominent buildings housing their own operations, regulators want them mostly providing capital to outside businesses and developers. They also don't want banks engaging in real estate speculation. The bank told the Office of the Comptroller of the Currency it should be allowed to develop the $60 million hotel because it plans to use more than 50 percent of the occupied rooms for lodging out-of-town employees, directors, vendors and others, according to postings on the OCC's Web site. The 15-story hotel will reduce lodging expenses and provide a better visitor experience, the bank said. The agency approved the Bank of America project in an "interpretive letter" dated Dec. 5, citing the hotel's use by bank visitors. On the same day, the OCC also approved Pittsburgh-based PNC Financial Services Group Inc.'s involvement in a $170 million office/hotel complex. OCC spokesman Kevin Mukri said banks often seek similar approvals on a variety of issues. The rulings "won't lead to an expansion of national bank real-estate powers," he said, noting the letters spoke to "specific fact situations." Bank of America spokesman Terry Francisco declined to comment about the ruling beyond the letter. The rulings, however, worry the real estate industry, which has long opposed banks treading on its turf. Steve Cook, a spokesman for the National Association of Realtors, said the projects were the largest to receive such approvals. "We're very concerned about regulatory permission that allows federally chartered banks to engage in activities not previously allowed," he said. "Our concern is this is a very short step into real estate brokerage and property management." The industry fears unfair competition from banks and the increased mixing of commerce and finance, Cook said. Since 2001, the association has successfully fought proposed Treasury Department rules that would allow banks to enter the real estate brokerage business. Bert Ely, a banking consultant based in Alexandria, Va., said national banks are big enough to handle the risk of large projects and are experienced in commercial real estate lending. But he expects regulators to watch the issue closely. "You may see more (projects), but I don't think it will come quickly," Ely said. Bank of America plans to break ground on the hotel at the corner of North College and East Trade Streets in late spring or early summer, with completion expected in the fall of 2008, Francisco said. The bank has not named a contractor. Wachovia Corp., Charlotte's other big bank, also is in the midst of developing a big uptown real estate project, which includes an office tower, condominiums and arts facilities. A Wachovia spokeswoman said she could not immediately comment on whether OCC approval was needed but noted the planned arts facilities would ultimately be owned by the city of Charlotte. The OCC declined to comment. __________________ Queen City Pulse

January 12th, 2006, 01:30 AM	#5
Style™ King of the Queen Join Date: Sep 2002 Location: Charlotte, NC Posts: 2,146 Likes (Received): 0	exactly. bank of america used to own the double tree in uptown. however, i have a feeling that they'll have more than just 'half' that hotel in town at some times. so they will ship some people off to other hotels that will not cost them as much. maybe not. but that's just a guess. __________________ Queen City Pulse

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January 11th, 2006, 08:03 PM	#2
iamnorthcarolina I Am North Carolina Join Date: Jan 2005 Posts: 58 Likes (Received): 0	Do you think that BOA using half of the hotel for its own use will hurt other uptown hotels. I am sure that a large part of hotel use today is for BOA visitors to the headquarters. I would think that the Ritz's close proximity to BOA headquarters will likely most hurt Westin and the Adams Mark as they are further walking distance from HQ and from Uptown dining and shopping options.

January 11th, 2006, 08:11 PM	#3
Justadude Registered User Join Date: Jul 2004 Posts: 1,363 Likes (Received): 0	^ Naturally, more competition (especially Ritz-quality competition) will hurt other hotels. But I don't think this is something that will seriously damage the profit lines of Westin or Adam's Mark. Ritz is clearly a step up in quality and price from those hotels, so they're going to aim for a slightly different demographic in the first place. As far as BoA using it as their hotel of choice, it might make a small dent in others' profits but again, they're not going to put any old middle-management shmoe in the Ritz. In the long run, this should actually help other hotels in the area. The growth of the hospitality sector, and the presence of a top-flight hotel in the middle of the city, will help attract the kinds of events and relocations that boost business for everyone.

January 11th, 2006, 08:36 PM	#4
uptownliving Registered User Join Date: Mar 2005 Posts: 1,172 Likes (Received): 0	Well with Wachovia starting construction on a 1M sq ft tower and hopefully the NASCAR HOF coming online the hotels will have plenty to go around.

January 12th, 2006, 03:34 AM	#6
oresaw Registered User Join Date: Nov 2003 Location: Charlotte Posts: 144 Likes (Received): 0	I think most people coming into town for business purposes with BofA are staying at the Omni right now due to its proximity to all of BofA's buildings instead of the Westin or Adam's Mark. I think the new Ritz's BofA clientele will be 1)visiting BofA employees who otherwise would have gone to the Omni or 2)guests specifically invited by BofA who are staying in town on the bank's dime, I think this category is rare and still is more likely to put a slight dent in the Omni's business but not much. As far as people coming to do business with BofA from other company's, those people will be traveling on their own companies dime and it is unlikely that their company will be willing to pay Ritz prices for a middle management level business traveler, those people will still be in other area hotels. Just because someone from out of town has business with the bank doesn't mean they will be at the Ritz, I think it's all in who's footing the bill.

January 12th, 2006, 04:42 AM	#7
norm21499 Registered User Join Date: Nov 2003 Posts: 44 Likes (Received): 0	The Adams Mark is basically closed now anyway

January 12th, 2006, 04:51 PM	#8
uptownliving Registered User Join Date: Mar 2005 Posts: 1,172 Likes (Received): 0	Norm are you working for a development company these days? I notice you have the inside track on information now.