The Courier of Montgomery County reports a dismal outlook for Conroe’s $147 million Hyatt Regency Hotel and Convention Center comes from a new report from global financial experts with a third credit downgrade and possible bankruptcy as the city’s only recovery path.
While S&P Global Ratings affirmed its B rating on Conroe Local Government Corporation’s first-lien, according to the June 3rd report, analysts lowered the rating on the corporation’s second-lien hotel revenue bonds by one notch to CCC from CCC+.
The report states, “Absent any material future improvement of the hotel’s operational and financial performance outperforming our base case, we anticipate a default on the subordinate debt in April of 2026.”
Scheduled to be repaid by the Conroe Industrial Development Corporation, a third lien was not affected.
$28.715 million was issued for its first lien, $27.16 million for its second lien and $21.215 million for a third lien by the local government corporation.
Made up of city councilmembers, in June of 2019 the city established the local government corporation. Receiving and spending taxpayer funds and private donations on projects that benefit the public is what a local government corporation does. Private-public partnerships are also created by local government corporations.
The rating drop was expected, according to Councilman Harry Hardman who was not a councilmember when the hotel project was approved.
Analysts say, according to the report, that the project’s cash flow dedicated to the second lien is only sufficient to pay for its debt service payment in September and a default is expected in April of 2026.
Competing and drawing businesses away from the Woodlands was what former Conroe leaders planned. This has not been the case, however.
