A long-time Waverly landmark hotel will be put on the auction block later this month after the bank holding the mortgage foreclosed on it.
MidWestOne Bank had held a note that current owners RR LC, or Rajesh and Ramesh Bhakta, had taken out for the ownership of the Red Fox Inn, located at 1900 Heritage Way.
The bank was trying to collect more than $892,000, plus interest, of the defaulted loan.
Meanwhile, the Bhaktas were negotiating a sale of the hotel to an investment group known as Red Fox Renaissance Inc., which had held a lease on the property while renovating it.
However, as part of the mortgage foreclosure proceedings, Bremer County District Court Judge Chris Foy has ordered a sheriff’s sale on the hotel. The sale will be held in the Bremer County Sheriff’s Office lobby at 10 a.m. June 25.
The hotel will be offered for cash only.
After the sale, the Bhaktas can try to redeem the property within 180 days, and the U.S. Small Business Administration has a year for the redemption, according to a sheriff’s sale notice published in Waverly Newspapers on May 23 and 30.
Red Fox Renaissance spokesman Richard Dane said the investment group had been working through an attorney on trying to purchase the hotel for several months before negotiations with the Bhaktas broke off in November.
“We walked out at the end of December,” Dane told Waverly Newspapers by phone on Sunday. “We weren’t going to be played to the detriment of the bank and the SBA.”
Dane said it is possible that Red Fox Renaissance could participate in the sale.
“It’s really a function of the redemption period that makes it pretty unlikely that the business will continue as a hotel,” he said. “It's the state of the facilities that make it such.
“We’re really not sure where things are going to go. It’s probably going to end up with the bank owning it.”
First opened in 1974, the Red Fox Inn, which has 118 guest rooms on 44,000 square feet, had fallen into a state of disrepair over the years. Dane and several investors began to fix and planned to renovate the popular landmark, expecting to put more than $5 million into the rehab.
“The goal of the partners is to create a Marriott- or Hilton-quality facility right here in Waverly,” Dane told Waverly Newspapers in a 2017 interview.
However, the investment group could only manage to repair the facilities. A sign on the marquee in front of the hotel states, “Closed for remodel.”
MidWestOne had filed a foreclosure petition on May 24, 2018, and Foy had entered a default judgment against the Bhaktas on Aug. 23, 2018.
Dane said that getting the Red Fox back to its former glory is “not likely to occur.”
“It’s disheartening,” he said. “We put two years of effort into it, and the owners somewhat knifed us in the back.”
He added that his group is only a party to the foreclosure due to them being tenants.
“It’s 100% on the owners (the Bhaktas),” Dane said. “We decided to cease all activities because our inability to work with them. The bank has come forward and said, ‘Not anymore, guys.’”