|By Dale Quinn, The Arizona Daily Star,
TucsonMcClatchy-Tribune Regional News
April 13, 2011--The Doubletree Hotel Tucson at Reid Park, a popular venue for community banquets and events, is the latest prominent hotel to face foreclosure here.
The hotel is delinquent on about $31 million in loans, documents filed in the Pima County Recorder's Office show. Monthly payments on loans that came due last August have not been made, nor have subsequent payments, the documents say.
Auction of the property at 445 S. Alvernon Way has been scheduled for July 7 at 11:30 a.m. at the Pima County Courthouse, 110 W. Congress St.
Regardless of the foreclosure filing, hotel operations will continue as normal, said general manager Helinda Lizarraga.
"We have a wonderful hotel here, and I think it's more of a debt restructuring than anything," she said.
The Doubletree is owned by affiliates of Transwest Partners/ NCH Corp. It's not the company's only property that's recently run into financial problems.
The Transwest company that owns The Westin La Paloma Resort and Spa, 3800 E. Sunrise Drive, filed for Chapter 11 bankruptcy protection last November to reorganize its debt. The threat of foreclosure on that property prompted that action, Transwest's bankruptcy attorney Kasey Nye said at the time of the filing.
The company had also been struggling to make mortgage payments on another of its properties, The Westin Hilton Head in South Carolina.
The financial troubles stem largely from Transwest's acquisition of the Westin portfolio in 2007, when property values peaked, Nye said.
The company had large amounts of mortgage debt as property values plummeted, convention business dried up and room rates dropped.
Documents filed with the Recorder's Office point to the same situation with the Doubletree. The deed of trust was recorded in March 2007, the documents say.
Reid Park Properties LLC, a Transwest affiliate, is shown as the borrower in the documents and WBCT 2007-31 South Alvernon Way as the beneficiary.
Michael J. Hanson and Randal G. Dix are listed as managers of Transwest Partners LLC in Arizona Corporation Commission documents. Hanson and his wife, Christine D. Hanson, personally filed for Chapter 11 bankruptcy protection in February, listing between $100,000 and $500,000 in assets and between $1 million and $10 million in liabilities.
Reached Tuesday, the Hansons' bankruptcy attorney, Eric Slocum Sparks, said he couldn't discuss the foreclosure filing for the Doubletree in detail. But given the value of the property with its advantageous midtown location, Hanson will likely try to work something out with the lender, he said.
"He's an astute businessman, and he's not going to let that quality property go," Sparks said.
Transwest Partners/NCH Corp. owns several Tucson area hotels, including La Posada Lodge & Casitas, Hampton Inn & Suites Tucson Mall, TownePlace Suites by Marriott Tucson and Embassy Suites Tucson Williams Center.
Hotel properties capitalized between 2005 and 2007 have been weighed down by high debt, while their business slowed and they were forced to lower prices for rooms, said Jerry Hawkins, a first vice president with CB Richard Ellis.
Other hotels around town have also sputtered in the economic downturn.
The owners of the Clarion Hotel near Tucson International Airport received notice last year they had defaulted on an $8.1 million loan.
The Wingate by Wyndham, which opened in Oro Valley in early 2009, received notice it was delinquent on $7.25 million in loans, according to Recorder's Office documents filed last October. That was after the hotel's builder, MSJ Investment Properties, filed for Chapter 11 bankruptcy protection earlier in the year.
The JW Marriott Starr Pass Resort & Spa has also missed mortgage payments. The credit-rating agency Realpoint LLC said in reports last year that the resort, owned by Signature Properties International, was delinquent on $165 million in mortgages.
Lizarraga, the Doubletree's general manager, said hotels here have had to compete with resorts in Phoenix that slashed prices. Tucson's loss of Major League Baseball spring training teams also dented the Doubletree's business, she said, though she holds onto optimism that conditions will soon improve.
Still, the number of hotel foreclosures will likely remain high over the coming year, as loan servicers make decisions about what they want to do with delinquent properties, Hawkins said. Lenders will sometimes hold off on taking back a hotel because it takes time and money to run them.
"Some of the lenders are trying to diligently work with the borrower," Hawkins said. "And we're seeing times where they're foreclosing and moving into a foreclosure sale."
Contact reporter Dale Quinn at firstname.lastname@example.org or 573-4197.
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Copyright (c) 2011, The Arizona Daily Star, Tucson
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