Inn at Wise gets new lease-purchase on life

Last year, the Wise County Industrial Development Authority and MK4 Hotel signed a four-year, $3 million lease-purchase agreement for The Inn at Wise.

MK4 Hotel owner Mike Patel of Richmond plans more than $1 million in renovations for the circa-1910 hotel, expected to be completed over the next year, including installing new floors, upgrading guest rooms and reopening the inn’s restaurant, which has been vacant for a couple of years.

Following a fire that destroyed the Dotson Hotel in 1909, a group of businessmen banded together to build the Colonial Revival-style Inn at Wise, which kept watch over Main Street for decades but fell into disrepair as the 21st century approached.

The IDA, then led by the late Carl Snodgrass, purchased the building in 2007 to prevent its demolition. Over the years, the authority spent more than $9 million on renovations to the inn, adding 27 guest rooms and 2,000 square feet of conference space.

Ultimately, though, the hospitality business wasn’t a good fit for the IDA.

“Their work is not being a hotel operation,” says real estate broker Fred McClellan, who represented the IDA in the deal. “You need to have experience, knowledge and practice being successful in that.”
Adds IDA Executive Director Brian Falin, “The plan all along had been to find appropriate ownership.”
Under the lease-purchase agreement,

MK4 Hotel will pay the IDA monthly payments of $21,218.76, equivalent to the IDA’s $3 million purchase price for the inn amortized over 20 years at 6% interest, according to Falin.

Patel, who owns three other hotels in Virginia, can purchase the property outright at any time during the term of the agreement, which can be extended up to three years after its 2029 expiration.

The deal was structured as a lease-purchase due to current high interest rates, according to Patel. “We just decided to [do it this way] till the interest rate goes down and we can do the financing properly.”
While tourism is part of the economic development strategy in Southwest Virginia, the region has relatively few hotels.

In addition to wanting to bolster tourism in Southwest Virginia, Patel is enthusiastic about providing a place for future hospitality workers to learn the business. “The community needs something,” he says. “The kids need something.”