Today’s L.A. Times is reporting that the St. Regis Monarch Beach in Dana Point is close to being foreclosed – their third mortgage of $70 million is in default:
http://www.latimes.com/business/la-fi-numonarch10-2009jun10,0,7571143.story
An excerpt:
Business is so bad — and funding so expensive — that hardly any hotels are being sold these days, and most are now worth 50% to 80% less than at the peak, said hotel broker Alan X. Reay of Atlas Hospitality Group in Costa Mesa.
Just this week, Sunstone Hotel Investors Inc. said it would turn the trendy W Hotel in downtown San Diego over to its lenders, part of a growing trend that Reay said was a “bloodbath.”
The St. Regis — which has several restaurants, a golf course and a private beach club — has been hit by a steep drop in bookings, according to the people with knowledge of the situation.
Built by the Makarechian development family of Newport Beach, the property is current, for now, on two other mortgages totaling $230 million on the 400-room hotel and golf course, these people said, speaking on condition of anonymity because of the sensitivity of the situation.
Why dont they lower their room rates for a start.Rates got so out of hand during the boom.right down the hill from me here near sacramento they want 150/ night for a room.Glad some people have that kind of money to throw around.I will sleep in my car before I get screwed by these crooks.
As luck would have it MY company also held its retreat there last year. We joked that any publicity was good publicity for the resort. Guess not.
Its a nice place, but there’s any number of these places around the country. Its nicer than some, not nicer than others. Where they get you at these places is the food and activities. The rooms aren’t that expensive compared to the unvierse of nice hotels ($400-500 a night for a sea view), but dinner is always $100 a person, golf $300 a round for an ok, not great course), etc.
I have PLENTY of money and would never pay more than $150 a night to stay at a US hotel.
You beat me to posting on this one Jim.
$300m debt on 400 rooms. $750k/room. $180/night debt service alone. Whointhehell ever thought this would pencil out as anything but a disaster?
I’ll tell you if I owned that (And I’d like think no way would I find myself in this situation but who knows), I’d march right on up and ask for my bail out.
It would be absolutely rational at this point. And for the Government to bail me out but watch my competitor fold would be rational.
Who wants to move to China?
Looks like that 4th quarter rally everyone has been talking about is right on schedule.
Also from the LA Times today: Median home prices drop below 1989 levels in some parts of Southland
http://www.latimes.com/business/la-fi-cheaphomes10-2009jun10,0,4802553.story?page=1
When I lived in San Clemente I would go there for drinks with friends once in a while. Yeah the drinks were $10-$12 but hey you get $300M ambiance.
I did always think that it was a little far off the sand for such extravagance though.
Also in the LA Times today: ” For Sale: Waterfront Mansion in Florida $1 Million Coupon Available”.
http://www.latimes.com/business/la-fi-coupon9-2009jun09,0,5552091.story
The last few sentences made me chuckle:
“Rich Ricciani is hoping the coupon will get him out of the doghouse.
“My wife was trying to tell me that a 15,000-square-foot house is too big for two people,” he said. “I didn’t believe her.”
But during construction he had to use his cellphone to find the contractor when they were both working on site.
“He’d be in the master bedroom and I’d be in the garage,” Ricciani said. “That’s when I knew it was too big.”
Screw all the hotels lets go couch surfing:
http://www.couchsurfing.org/
I’m a partner in a discount hotel back east, and it’s in the toilet right now too. Occupancy rates down 40% y over y. We dropped rates but no ones coming. I can’t imagine the high end hotels?
Then there are stories like these:
http://www.lasvegassun.com/news/2009/jun/09/fontainebleau-developer-files-bankruptcy/
Just what Vegas needs: a few more thousand people out of work.
Not to worry about riffed Vegas hotel workers – the SEIU and ACORN will take good care of them with the “stimulus” monies (our tax dollars) sent to them.
All I think about when people mention Las Vegas is old sci-fi movies: “Cherry 2000,” “A Boy and His Dog” and “Damnation Alley.”
I think about “Fear and Loathing in Las Vegas”….we should do a road trip.
Oh yeah, right. Mrs. the Realtor and Mrs. Dawg would be down with our doing Vegas for my 50th.
Actually I’ve been seriously considering a sort of road trip. Bakersfield to High Desert to Inland Empire documenting the current conditions. It wouldn’t be as much fun but I might at least be able to get permission. 😉
We could take the Chevy – my blown head gasket turned into a new engine, it should be ready in the next week or two. It would make for a great undercover car – nobody would suspect us being renegade real estate investigators……
http://www.worth1000.com/emailthis.asp?entry=510447
“Their THIRD mortgage of $70 mil” – WTF?
The W hotel too:
http://online.wsj.com/article/SB124441071403592235.html
And it’s not like there wasn’t already a nice resort across the street–on the beach: The Ritz-Carlton. Oh yeah, there was no golf, so let’s recreate everything, make it bigger and splasher and add golf. That should pencil in.
I’m sure these folks and their accoutnants were banking on conitnued appreciation and then selling it. (Like every other flipper and homeowner in CA). There’s an amazing amount of turnover in hotel properties (have to restart the clock on the depreciation).
Didn’t KSL put an HUGE loan on The Del??? I know they seem to be a greedy bunch–A couple of years back, they took over nearly all of the retail from private shop owners who were already paying extremely high rent.
Research results–KSL too out $794M on The Del and then sold to CNL-KSL manages the property, but retained only a 30% ownership–that translates to well over $1M in debt per room!!!!! OUCH!!!
My Dad tried to book a room for a night and a round of golf at the St Regis and they could not offer a tee time..sold out!
So he booked a night at the Best Western at Aviara (soon to be the formerly known as Four Seasons…) $450 a night, $225 per round of golf x 2 days x 2 people. Dinner/breakfast/lunch’s.
I wish he would have put 2k into my sons college fund instead!