Developer BPM Real Estate Group has defaulted on a $127 million loan for The Viv Hotel, Anaheim, which initially opened as a Radisson Blu hotel in 2020.
The Portland, Ore.-based developer originally took out a senior construction loan of $115 million from Miami-based lender 3650 REIT, which was upsized to $127 million in September last year.
BPM in 2018 signed on to build the 326-room hotel on a former city-owned land site alongside the Santa Ana (5) Freeway, and brought on Radisson Hotels to manage the property. BPM put a reported $175 million—over $500,000 a key—into the project, whose food offerings include the Spanish-influenced Top of the V restaurant on its top floor.
The hotel, which remains open, ranked No. 31 on the Business Journal’s list of largest hotels by room count in June. Current room rates start at $222 per night.
Challenges
The Viv site is just east of the Santa Ana (5) Freeway at 1601 S. Anaheim Blvd., about a mile from the Disneyland Resort. Its location on the other side of the freeway places it a bit off the beaten path from the Disneyland-to-Platinum Triangle route along Katella Avenue.
The 12-story hotel took two years to construct and opened in 2020, marking one of the largest hotels built east of the 5 Freeway in the city. It’s one of three recently built hotels in Anaheim to receive a AAA Four Diamond property designation.
The owners have faced their share of challenges and changes since opening.
After dealing with the travel restrictions and COVID-19 protocols, the 326-room property changed from a Radisson to Crescent Hotel & Resorts as part of a rebrand to The Viv in 2022.
Last year, it was added to Marriott’s tribute portfolio of independent boutique properties with hotel officials looking to gain expanded visibility from the company’s rewards program of more than 180 million members.
The hotel has changed general managers at least three times since opening, with the latest being Donovan Stephens who came onboard in April.
A combination of location and a high-end cost structure are considered to be contributors to the lack of performance from the hotel.
“It’s a case of too much debt and not being able to generate a significant profit to alleviate the debt,” Alan Reay, president of Irvine’s hotel consultancy and brokerage Atlas Hospitality Group, told the Business Journal.
It is the largest hotel in Orange County reported to have defaulted on a loan in recent years.
Reay said that this was not to be taken as a reflection of the current market in Anaheim, which notably bounced back from pre-pandemic hospitality levels in 2022.
Owner Outlook
Reay said that a key factor in elevating the hotel’s cash flow will have to do with its cost basis.
BPM executives called the project the “perfect family-friendly upper upscale hotel” back in 2018.
The property was originally designed as a newer, upscale take on Radisson hotels and as The Viv, it continued operating in the luxury space prioritizing single business travelers, families and couples without children.
It was the only hotel project of the few that opened in 2020 that did not receive tax incentives from Anaheim.
Any changes to be made in the future will depend on the next owner BPM decides to sell to. It needs a company that knows how “to pivot,” and has to maintain certain room rates, Reay said.
“There will be buyers for this property, no question,” Reay said. “There are always buyers for Anaheim.”
