The ritzy St. Regis Monarch Beach Resort could soon see another change in ownership, according to recent buzz in real estate circles.
Seattle-based Washington Real Estate Holdings LLC is nearing a deal to sell the 400-room hotel in Dana Point, one of Orange County’s highest-profile luxury resorts, according to several sources.
It would be the third change in ownership since 2009 for the resort, which grabbed headlines for its guest list and its own financial woes during the last recession.
Neither a sales price nor any potential buyers have been disclosed.
Eastdill Secured, a unit of San Francisco-based Wells Fargo & Co., is marketing the property, according to sources.
Sources not directly involved in the deal say the sales price is likely to be near $290 million, or a lofty $725,000 per room.
If that figure holds, it would be among the priciest resort or hotel sales in the U.S. so far this year in terms of total price and on a per-room basis.
The St. Regis was valued at close to about $375 million in 2007, when it was refinanced by its owners at the time, Newport Beach-based Makar Properties LLC and San Francisco hedge fund investor Farallon Capital Man-agement LLC.
The property’s value was estimated to be less than half that amount at the bottom of the downturn.
Washington Real Estate Holdings took over the property last year in a deal valued at about $235 million, or about $588,000 per room. The company, which owns office, industrial and other types of real estate, previously owned debt tied to the resort.
The investor stands to make a sizeable profit on its investment if the St. Regis ends up selling near the rumored price.
The $290 million price expected for the St. Regis was disclosed prior to upheavals in stock markets over the past two weeks (see related story, page 1).
The volatility on Wall Street could end up altering the terms of the deal or lead to a postponement or break-off on sales talks, sources noted last week.
Possible Buyers
Potential investors said to be interested in the St. Regis include an overseas buyer, affiliates of Marriott International Inc., as well as a few institutional investors and real estate investment trusts.
Well-funded investors have been bidding up prices of high-end hotels and resorts across the country lately, although none have come close to the price being discussed for the St. Regis.
Among high-end resort hotels selling in Southern California of late, the 237-room Mondrian Los Angeles traded hands for about $137 million, or about $580,000 per room, in May.
Santa Monica’s 162-room Viceroy Hotel sold for about $80.1 million, or nearly $500,000 per room, in March.
The St. Regis resort, which sits next to Pacific Coast Highway near the border of Dana Point and Laguna Beach, counts three swimming pools, eight tennis courts, and a number of upscale restaurants, among other amenities.
The property also includes the Robert Trent Jones Jr.-designed Monarch Beach Golf Links.
Makar opened the St. Regis in 2001 and turned it into one of the county’s most posh resorts, known as a place for extravagant holiday parties and political fundraisers.
AIG Affair
The resort also made national headlines for catering lavish events for corporate guests such as bailed-out insurer American International Group Inc. in 2008.
Backlash from the AIG outing caused other corporate guests to pull out of events at the St. Regis, which along with the faltering economy caused occupancy rates to fall over the subsequent year.
St. Regis executives reported seeing a 20% drop in business in the months following AIG’s event.
In 2009, New York-based lender Citigroup Inc. foreclosed on the St. Regis after the prior owners fell behind on payments for $300 million in debt from its 2007 refinancing.
Citigroup held a $70 million secondary mezzanine loan on the resort.
It was arguably Orange County’s most prominent and highest-priced foreclosure of recent years.
Washington Real Estate Holdings had held part of $230 million in primary debt on the hotel, along with Newark, N.J.-based Prudential Financial Inc.
$205M Mortgage
In taking over the property last year, Washington Real Estate Holdings reportedly cut the debt on the hotel to $205 million from $300 million.
That reportedly included a $165 million mortgage with Prudential and a $40 million secondary loan with another source.
“We believe in the long-term viability and success of this resort,” Washington Real Estate Holdings Chief Executive Craig Wrench said in a statement at the time of last year’s deal. “There is strong evidence that hotel fundamentals are beginning to rebound.”
