|By Pat Maio, North County Times,
Escondido, Calif.McClatchy-Tribune Regional News
Jan. 22, 2011--CARLSBAD -- Construction began Friday on the first full-service resort and spa hotel in the western United States since 2008, according to one of the developers involved in the project.
The 215-room luxury hotel, called the Hilton Carlsbad Oceanfront Resort & Spa, will be built near Carlsbad Boulevard and Ponto Drive.
The project also is significant because the investment group was able to obtain financing in a difficult climate for hotel loans. A survey released Friday showed that San Diego County is one of the worst areas in the state for hotel defaults and foreclosures.
Hotel experts have long complained privately about the lending market for hotels.
Bill Canepa, the lead partner who developed the 161-room Hilton Garden Inn in Carlsbad and the Wave Crest at Del Mar, said his partnership group hopes to complete construction on the $75 million project by June 2012.
"I think the economy is coming back," Canepa said.
Canepa is joined in the investment group by Lynn Cannady, a Bay Area designer of factories and investor along with Canepa, and Jeff Chandler, a member of the Chandler family long connected to the Los Angeles Times.
The Chandlers sold the Los Angeles newspaper and parent Times Mirror Co. to the Tribune Co. of Chicago in an $8 billion cash-and-stock deal in 2000. Seven years later, Tribune sold its media empire to billionaire Sam Zell, who later filed for bankruptcy protection as the economy worsened.
Chandler, who lives in Rancho Santa Fe and owns an avocado grove in Fallbrook, also has investment ties with Canepa in his Wave Crest vacation time-share resort, which is a form of partnership where owners get to use the property during certain weeks, or days, of the year.
Land for the Hilton Carlsbad Oceanfront Hotel and Resort was assembled over the past nine years by buying five properties along the beachfront for nearly $20 million, Canepa said.
Financing for the project was just completed this month with Hartford, Conn.-based UBS Realty Advisors, a unit of banking giant UBS AG's UBS Global Wealth Management division.
Soltek Pacific Construction of San Diego was selected as the general contractor in charge of building the resort, which will include "tropical swimming areas," a new "Chandler's Restaurant & Lounge," 15,000 square feet of indoor and outdoor meeting and banquet facilities, and a spa.
"This is an ideal time to build because things can be built so reasonably now," Canepa said.
"We would not have gotten this loan if the Hilton Garden Inn hadn't been such a great hotel," said Canepa, who said the hotel has seen 80 percent occupancy rates during the recession.
Occupancy rates for San Diego hotels have been improving.
Henderson, Tenn.-based Smith Travel Research said this week that occupancy rates for San Diego hotels stood at 66.7 percent in 2010 and 62.7 percent in the year-ago period.
However, even though more people are staying in local hotels, a survey released Friday by Atlas Hospitality Group showed that California continues to lead the nation in hotel foreclosures.
In the three months ending Dec. 31, Atlas said, 465 California hotels were in default or have been foreclosed on.
San Bernardino County led the state in the number of foreclosed hotels with 17, followed by San Diego County with 16 and Riverside County with 14. On defaults, Los Angeles County led with 35, followed by Riverside County with 32 and San Diego County with 31.
Atlas President Alan X. Reay said the volume of bad loans far exceeds any that he has ever seen.
In recent months, construction on smaller hotels began in Vista and Oceanside, as well.
Call staff writer Pat Maio at 760-740-3527.
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Copyright (c) 2011, North County Times, Escondido, Calif.
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