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

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

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The other recent Atlas assignment to market distressed hotelassets is a portfolio of nine sub-performingloans secured by six hotels in California and three in otherstates totaling 806 rooms with a total portfolio loan balance ofnearly $23.8 million. When Atlas won the assignment recently, Reaytold GlobeSt.com that it marked one of the first indications thatlenders are beginning to take action on some of the loans that havebeen languishing on their balance sheets for some time.

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As GlobeSt.com noted in its recent report on the nine-loanportfolio that Atlas is marketing, Reay has been saying for sometime now that hotel lenders could not extend loans indefinitely andthat he expected 2010 would be the year that the lenders wouldfinally begin to take action on troubled loans. "It's just a sortof acceptance from the lender's standpoint that they can't continueto extend these loans, either from a manpower standpoint because itis very time-consuming to deal with these issues, or from afinancial standpoint because they need to start cleaning up theirbalance sheets," the Atlas president said.

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The other two Sunstone hotels that recently went intoreceivership were the 258-room W Hotel in San Diego and the341-room Renaissance Westchester in White Plains, NY. At the sametime that Sunstone is shedding these and other assets via voluntarydefaults and a debt restructuring program, the company has been inthe market to acquire assets and has acquired two hotel loans.

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On April 30, 2010, for example, the company purchased two hotelloans with a combined principal amount of $32.5 million plusaccrued interest of approximately $800,000, for a total purchaseprice of $3.7 million, according to an SEC filing. The loansincluded a $30 million, 8.5% mezzanine loan maturing in January2017 secured by the equity interests in the company’s 460-roomDoubletree Guest Suites Times Square, in which Sunstone owns a 38%equity interest in a joint venture that owns the hotel.

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Sunstone also bought a $2.5 million, 8.075% subordinate notematuring in November 2010 secured by the 101-room boutique hotelknown as Twelve Atlantic Station in Atlanta Georgia. The companypurchased the mezzanine loan for $3.45 million and the subordinatenote for $250,000. None of the debt on the Doubletree Guest SuitesTimes Square is in default; however interest on the mezzanine loanis currently being deferred in accordance with the provisions ofthe loan. The subordinate note secured by the Twelve AtlanticStation is currently in default.

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