Hotel Online
News for the Hospitality Executive



Dana Pointís St. Regis Monarch Beach Resort
Set for Auction on July 7, 2009
Owner Makallon Resorts LLC Stopped Making Mortgage Payments Earlier this Year


By Mark Mueller, Orange County Business Journal Staff

June 10, 2009 - Dana Pointís ritzy St. Regis Monarch Beach Resort will get a new owner next month if a foreclosure-driven sale moves forward.

An affiliate of New York-based Citigroup Inc. is moving to foreclose on the 400-room hotel, one of Orange Countyís highest-profile luxury resorts.

An auction of the St. Regis, which opened in 2001, is scheduled for July 7 at the local offices of First American Title, part of Santa Ana-based First American Corp.

The hotel, which is operates under Starwood Hotels & Resorts Worldwide Inc.'s St. Regis brand, now is owned and run by Newport Beach-based Makar Properties LLC, in a partnership with a unit of San Francisco-based hedge fund Farallon Capital Management LLC.

Makar opened the St. Regis in 2001 and turned it into one of the county's poshest resorts, known for hosting lavish holiday parties and political fundraisers, as well as catering to corporate guests such as bailed-out insurer American International Group Inc. last year.

The resort, which sits next to Pacific Coast Highway near the border of Dana Point and Laguna Beach, counts three swimming pools, eight tennis courts, and a number of upscale restaurants, among other amenities.

A sale of the property also would include the Robert Trent Jones Jr.-designed Monarch Beach Golf Links, according to court documents.

Like other area hotels, the five-star propertyís faced a tough time keeping occupancy levels high the past year due to the recession, in particular because of cutbacks by corporate-sponsored visitors.

Officials reported seeing a 20% drop in business in the months following AIGís well-publicized corporate outing at St. Regis last fall.
The propertyís owners are also faced with a dire economic environment thatís impacted the values of resort properties across the country.
The St. Regis has about $300 million worth of debt tied to it, according to foreclosure-related documents filed with New York courts. That includes a $230 million mortgage from Prudential as well as a $70 million mezzanine loan funded by Citigroup.

The resortís currently worth closer to $150 million today, given the current economic situation facing the hotel industry, said Alan Reay, president of Atlas Hospitality Group, an Irvine-based hotel consultancy.

ďThereís a strong chance that a number of trophy properties will be going back to the lender. Properties have dropped so far in valueĒ the past year," Reay said.

The current Makar-Farallon partnership, operating under the name Makallon Resorts I LLC, stopped making payments on the property earlier this year, according to industry sources.

A foreclosure had been predicted by some locals for as early as May; sources familiar with the propertyís ownership expressed doubts that Makar would see any current profits from the property as early as a year ago.

Makar couild have taken profits out of the hotel when it was refinanced in 2007.

Citigroupís position as the mezzanine lender gives it the first chance at foreclosing on the property. Itís expected the bank will make an attempt at taking ownership of the property at the auction next month.

There still is a chance that the propertyís current owners could renegotiate terms of its loan with the bank and avert a foreclosure, sources said.

(Reprinted with permission - The Orange County Business Journal)


Orange County Business Journal

Also See: GM Seamus McManus and owner, Paul Makarechian Open the $240 million Tuscan-inspired St. Regis Monarch Beach Resort & Spa / Aug 2001
Capital Pacific Holdings, Inc. Selects Starwood to Manage $240 million Resort Project in Dana Point, California / June 2000
Capital Pacific Holdings, Inc. Buys Monarch Beach Links, Golf Course, Dana Beach CA and Plans 5-Star Hotel Development / July 1998 



To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| One-on-One |
Viewpoint Forum | Industry Resources | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions.