COMMERCIAL
Last year’s change in ownership for Makar Properties LLC’s St. Regis Monarch Beach in Dana Point might be the most well-known bank takeover of an upscale resort in the country during the downturn.
But a handful of other upscale resorts across the U.S. that count OC ties also are seeing the effects of the down economy, which has impacted the value of hotels more than any other type of commercial real estate.
In Scottsdale, lenders have taken over the Intercontinental Montelucia Resort & Spa a little more than a year after the 293-room resort was opened by Irvine’s Crown Realty & Development Corp.
Foreclosure proceedings were completed last month on the Montelucia, with German lender Eurohypo AG taking ownership of the hotel, according to local reports. The resort had $180 million of debt tied to it.
Eurohypo was the lead lender for a $150 million construction loan. The resort also had a $30 million mezzanine loan from bankrupt Lehman Brothers Holdings Inc.
The resort, which has hosted President Obama and celebrities such as Jay-Z, had been doing better than other area resorts in the past year, the property’s receiver told the Arizona Republic last month. But it was burdened by opening amid the recession in November 2008.
Foreclosure proceedings initially were filed against the property a year ago after Crown Realty defaulted on its construction loan. A trustee’s auction of the Montelucia was completed about two weeks ago.
Crown Realty reportedly bid $120 million to retake the resort, but Eurohypo won the auction with a $122 million bid. The lender intends to sell the hotel, representatives for the bank told the Arizona Republic.
Crown Realty also built 34 luxury homes at the resort. It had sold 24 of them at prices in the $2 million range. The lender now owns the remaining unsold homes.
Aspen Resort
In Aspen, Colo., Newport Beach’s Centurion Partners is fighting to hold on to land near a ski resort where the resort and high-rise developer wants to build a hotel, which is expected to cost several hundred million dollars.
Centurion, a frequent developer in Colorado, is the parent company of Aspen Land Fund II LLC, a venture that has proposed building an upscale, 75-room hotel at the base of Aspen Mountain. The company has a $22.5 million loan from Alpine Bank on the undeveloped land.
Aspen Land Fund filed for bankruptcy in September in what the company’s lawyers have described as a defensive move made to save the proposed Lodge at Aspen Mountain project.
Alpine Bank was said to be looking at selling off the loan to a third party set to foreclose on the land, scrap the hotel project and build a less-expensive townhome project. The bankruptcy filing, made in Colorado courts, put the bank’s plan on hold.
A hearing on the matter—including efforts by Alpine Bank to dismiss the case—is expected this month.
Partners of Centurion, which had been in discussions with its lender about extending terms of its loan before taking legal action, told the Aspen Times last month that they are preparing an exit strategy to emerge from bankruptcy. Their plan includes raising money to move ahead with the hotel project, which still needs city approval.
The bankruptcy filing showed Aspen Land having about $35 million in liabilities, including the Alpine Bank loan. The largest unsecured creditor listed for the case, with a $6.9 million claim, is a family trust tied to Newport Beach’s Robert Hoff, general partner of Crosspoint Venture Partners.
Stoneridge Gets Active
In the Jan. 25 issue of the Business Journal, I wrote a story noting how Newport Beach real estate investor Stoneridge Capital Partners had been taking a slow approach to acquisitions in the past year, waiting for better properties to come on the market.
That slow approach lasted for only a couple of weeks. Stoneridge said it just bought the Mililani Community Shopping Center in Oahu. It’s the first deal to date in Hawaii for Stoneridge, which is run by Chief Executive Greg Merage.
The 180,300-square-foot retail center sold for $50 million, or about $277 per square foot. It was an all-cash transaction.
The seller was A&B Properties Inc., the real estate subsidiary of Honolulu-based Alexander & Baldwin Inc. It’s the second recent deal between Stoneridge and A&B Properties: in December Stoneridge paid $20 million for a 104,600-square-foot shopping center in Indian Wells.
