San Clemente-based Sunstone Hotels Investors Inc. said Thursday it’s in the process of handing back 11 hotels to a lender after it stopped paying on their mortgage in November.
Sunstone is giving back hotels in San Diego, Los Angeles, Atlanta and elsewhere to Massachusetts Mutual Life Insurance Co., which holds a $246 million loan on the hotels.
The company said talks with the lender about reworking the debt proved unsuccessful.
Sunstone said it is working to transfer the hotels to a court-appointed receiver.
The company said it expects to see a $83 million impairment in the fourth quarter related to the forfeitures.
The hotels have a current market value of about $173 million, according to Sunstone.
Sunstone has been giving back hotels that have become worth less than what’s owed on them during the downturn. Last year, the company turned over three hotels.
It now owns all or part of 26 hotels.
Even as Sunstone sheds weak or underwater hotels, the company is seeking to buy others.
“The company believes that the recent declines in demand for lodging and continuing capital constraints may lead to opportunities to acquire hotels at discount valuations,” Sunstone said.
Late last year, Chief Executive Art Buser said he’s spending about a third of my time looking at possible acquisitions.
The company’s remaining hotels continue to feel the effects of the downturn.
Revenue per available room, a measure of performance for hotels, was $97.85 in the fourth quarter, down 14% from a year earlier.
For all of 2009, revenue per available room was $102.71, down 18.5%.
“We are seeing a moderation in the decline of RevPAR, and we continue to drive operational efficiencies throughout our portfolio,” the company said.
