IRVINE, CA-Locally based Atlas Hospitality Group has landed an assignment to market the 299-room Marriott Ontario Airport Hotel in Ontario, CA, the second assignment the Irvine-based firm has landed recently to market distressed hotel assets. The Marriott is one of three hotels owned by the San Clemente-based Sunstone Hotel Investors REIT that have been handed over to receivers recently, according to an SEC filing by Sunstone.

Atlas president Alan X. Reay tells GlobeSt.com that the Marriott Ontariio, which was opened in 1986, has been renovated with $7.3 million in capital expenditures since 2003 and represents "an opportunity to acquire one of the few full-service hotels in the Ontario market," one that has consistently been a top performer in both average daily rate and occupancy. The hotel is adjacent to the Ontario Convention Center and just north of Ontario International Airport.

The other recent Atlas assignment to market distressed hotel assets is a portfolio of nine sub-performing loans secured by six hotels in California and three in other states totaling 806 rooms with a total portfolio loan balance of nearly $23.8 million. When Atlas won the assignment recently, Reay told GlobeSt.com that it marked one of the first indications that lenders are beginning to take action on some of the loans that have been languishing on their balance sheets for some time.

As GlobeSt.com noted in its recent report on the nine-loan portfolio that Atlas is marketing, Reay has been saying for some time now that hotel lenders could not extend loans indefinitely and that he expected 2010 would be the year that the lenders would finally begin to take action on troubled loans. "It's just a sort of acceptance from the lender's standpoint that they can't continue to extend these loans, either from a manpower standpoint because it is very time-consuming to deal with these issues, or from a financial standpoint because they need to start cleaning up their balance sheets," the Atlas president said.

The other two Sunstone hotels that recently went into receivership were the 258-room W Hotel in San Diego and the 341-room Renaissance Westchester in White Plains, NY. At the same time that Sunstone is shedding these and other assets via voluntary defaults and a debt restructuring program, the company has been in the market to acquire assets and has acquired two hotel loans.

On April 30, 2010, for example, the company purchased two hotel loans with a combined principal amount of $32.5 million plus accrued interest of approximately $800,000, for a total purchase price of $3.7 million, according to an SEC filing. The loans included a $30 million, 8.5% mezzanine loan maturing in January 2017 secured by the equity interests in the company’s 460-room Doubletree Guest Suites Times Square, in which Sunstone owns a 38% equity interest in a joint venture that owns the hotel.

Sunstone also bought a $2.5 million, 8.075% subordinate note maturing in November 2010 secured by the 101-room boutique hotel known as Twelve Atlantic Station in Atlanta Georgia. The company purchased the mezzanine loan for $3.45 million and the subordinate note for $250,000. None of the debt on the Doubletree Guest Suites Times Square is in default; however interest on the mezzanine loan is currently being deferred in accordance with the provisions of the loan. The subordinate note secured by the Twelve Atlantic Station is currently in default.