IRVINE, CA-Prime Hospitality LLC has acquired the 299-room Marriott Ontario Airport hotel in a sale that was brokered by locally based Atlas Hospitality Group on behalf of the hotel's receiver―and a deal that reflects how some of the same owners and investors who are losing their properties in defaults and foreclosures these days are buying other properties. For example, the owner who lost the Ontario Marriott was San Clemente-based Sunstone Hotel Investors, a REIT that is now buying other properties.

These sales aren't always hotel deals and those who default don't always buy other properties: Sometimes those who lose properties later repurchase them. A case in point is a 19-acre office development tract in the Playa Vista area of West Los Angeles that Tishman Speyer recently retook control of after the property went into receivership. The 19-acre parcel was part of 56 acres that went into receivership last year.

In the Prime Hospitality's acquisition of the Ontario Marriott, the sales price was not disclosed, with Atlas president Alan Reay citing confidentiality agreements. However, Reay confirmed that the hotel sold for less than the debt on the property.

According to public filings by Sunstone, the company stopped making payments in September last year on a $25.5 million, 5.34% non-recourse mortgage on the Marriott. In January this year Sunstone reported the net book value of the hotel at approximately $16.4 million.

Despite giving up the Ontario Marriott and other hotels, Sunstone is in an acquisition mode. The company recently bought the 409-room Royal Palm Hotel in Miami Beach for $126.1 million and is reported to be considering the purchase of the 1,651-room Manchester Hyatt in San Diego―which could fetch $580 million, industry sources estimate.

Reay observes that Sunstone's reported interest in the San Diego property illustrates how unusual and interesting the acquisitions world has become since the market turned. He points out that Sunstone may be headed back to the San Diego market after exiting four hotels there by handing them over to lenders or special servicers: the Courtyard by Marriott San Diego Old Town, Holiday Inn Downtown, Holiday Inn Express San Diego Old Town and the W Hotel.

Sunstone, which reported a net loss of $4.9 million and positive FFO of $17.8 million for the latest quarter, has said for some time that current conditions are favorable for acquisitions. It cited "increasing signs of a cyclical recovery" in its latest financial report, saying that it remains on the lookout for acquisitions.

The acquisitions by Sunstone and others who have lost properties suggest that the investors are now looking toward recovery. Sunstone president and CEO Art Buser, for example, said in the company's recent earnings conference call that he is optimistic about the hotel industry in general and Sunstone in particular.

Tishman Speyer senior managing director John Miller said of the company's buyback of the 19 acres in Playa Vista that it "will enable us to develop this property as the West Los Angeles office market recovers." In January, the firm completed the first phase of the Campus at Playa Vista development, a 325,000-square-foot, four-building project that is 70% leased and is entitled for approximately 600,000 square feet of additional commercial office space. The 19 acres that Tishman Speyer recovered does not include a group of historic industrial buildings and land surrounding those buildings, "which will continue to be controlled by the receiver for the lenders who financed the original acquisition in 2007," Tishman Speyer said in a press release.