Washington Holdings, a private investment firm, says that it bought Citigroup's remaining equity interest in the seaside resort. Citigroup held a $70 million mezzanine loan on the property and, according to industry sources, the new owner paid $5 million to gain control of the mezz debt.
Washington Holdings already had an interest in the St. Regis before gaining control of the property in the new deal. Along with an affiliate of Prudential Insurance Co., the Seattle-based firm held the $230 million first mortgage on the property.
Washington Holdings president and CEO Craig Wrench said that the deal "substantially reduces property level debt so that the resort can be self sustaining." Wrench further commented, "We believe in the long-term viability and success of this resort," adding that although times are still tough in the hospitality industry, "The hotel industry is in a very different place today than a year ago and there is strong evidence that hotel fundamentals are beginning to rebound."
Opened in 2001, the St. Regis was one of the largest hotels in California to be foreclosed on in 2009, according to a report from Irvine-based Atlas Hospitality Group. Alan Reay, president of Atlas, said in that report and others that luxury resorts like the St. Regis and the troubled W Hotel in San Diego would be among those hit hardest by the economic downturn because they were financed at the height of the market and at steep prices.
The St. Regis―in addition to its 400 rooms― features an 18-hole Robert Trent Jones Jr.-designed golf course, 65,000 square feet of indoor and outdoor meeting space, restaurants and a 30,000-square-foot spa. It is managed by Starwood Hotels & Resorts Worldwide.
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