The San Diego Union-Tribune
Lender Takes Possession of Park Hyatt Aviara
By Lori Weisberg
Carlsbad’s luxury resort, Park Hyatt Aviara, has been taken over by its lender following a years-long struggle by its previous owners to repay debt that was coming due…
…The 2011 loan extension expired in February of this year.
“This is not a reflection that the hotel market was bad, it was a reflection that the owner paid too much and the debt was too high,” said Alan Reay, president of Orange County-based Atlas Hospitality Group.
“The lender at one time had realized it was in their interest to cut the interest rate and work it out with the borrowers, but when the loan came due, the special servicer decided to not extend it any further and take the property back. And you have the borrower saying I’m not going to fight it.”
The 200-acre resort was at the center of a very public feud in 2009 when Broadreach sought to oust the hotel’s longtime operator, Four Seasons Hotels and Resorts.
Although Broadreach had tried to immediately remove Four Seasons, contending that it had failed to run the property in a “cost-effective manner,” the matter ultimately went to arbitration.
A three-member panel eventually decided the two parties should terminate their relationship, but also concluded that both sides had “contributed to the demise of the business relationship.”
A year later, Aviara became a Park Hyatt, which is the Hyatt chain’s upscale, contemporary brand.
There was no indication of whether the Park Hyatt will be resold. CW Capital may decide it makes sense financially to hold onto the resort, Reay said.
“It used to be where special servicers would put the hotels up for sale right away, but now we’re seeing the lenders hold on to the assets for a much longer period of time,” he said. “They see that over the long term, they’ll recoup their money or make a profit.”