|By Kimberly Pierceall, The
Press-Enterprise, Riverside, Calif.McClatchy-Tribune Regional News
September 18, 2009 - The owner of the 299-room Marriott Ontario Airport hotel has stopped making payments on the $26 million mortgage and will give the hotel back to lenders.
Executives with Sunstone Hotel Investors, the hotel's owner, said in a conference call Wednesday afternoon that the hotel's value had fallen about 36 percent to $16.7 million, making it worth far less than the loan.
"The vast majority of hotels are upside down," said Alan Reay, president of Irvine-based hotel brokerage firm Atlas Hospitality Group. "You're going to see a lot more of this happening," he said.
Jim Butler, a partner and hospitality lawyer with Jeffer Mangels Butler & Marmaro in Los Angeles, said Sunstone's decision wasn't surprising considering the revenue hotels earn for each available room has dropped as much as 40 percent in some cases.
A message left with the hotel's general manager and a representative of the management company were not returned.
In June, San Clemente-based Sunstone sold the 292-room downtown Marriott Riverside for $19.3 million. The buyer, Barry Lall with San Diego-based Pinnacle Hotels USA, said then that he thought it was a good deal.
"I like buying low and selling high," Lall said.
The Riverside property had net income that declined from $890,000 in the first quarter of 2008 to $775,000 in the second quarter, $481,000 in the third quarter and $251,000 by the fourth quarter, according to a financial statement from Sunstone.
The Marriott Ontario Airport earned profits of $447,000 in the first quarter of 2008 and $274,000 in the second quarter, but lost $23,000 and $55,000 in the third and fourth quarters respectively.
Sunstone has no other Inland hotel properties.
Reach Kimberly Pierceall at 951-368-9552 or kpierceall@PE.com
To see more of The Press-Enterprise or to subscribe to the newspaper, go to http://www.pe.com.
Copyright (c) 2009, The Press-Enterprise, Riverside, Calif.
Distributed by McClatchy-Tribune Information Services. For reprints, email email@example.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. NYSE:SHO,