|By Dennis Darrow, The Pueblo Chieftain,
Colo.McClatchy-Tribune Regional News
Sept. 27, 2011--The Clarion Inn and its lender recently reached a refinancing deal that will leave the hotel stronger, the hotel's owner says.
Hotel owner New Vision LLC expects the agreement to be finalized in October.
The 191-room hotel has remained in full operation since receiving a foreclosure notice from the lender in August.
Going forward, the hotel plans to remodel its lobby and outfit rooms with 37-inch flat screen televisions as part of another round of property upgrades, the owner says.
The upgrades follow a $2.8 million modernization under-taken in 2008 after New Visions acquired the former Holiday Inn property at 4001 N. Elizabeth St.
Subhash "Naik" Naik of Bakersfield, Calif., the managing member of New Vision LLC, who was in Pueblo last week, said the hotel's future is bright.
The foreclosure action was invited by the recession-squeezed New Vision as a way to spur refinancing talks with its lender, California-based Beach Business Bank, he said.
Across the nation, banks are refusing to refinance loans at better terms until the owners of distressed residential and commercial property start missing payments, he said.
Accordingly, more property owners -- both homeowners and commercial property owners -- are now adopting the practice of missing payments in order to force banks into action, he said.
The Clarion Inn's owner took such a path, Naik said. "As part of a well-thought-out plan, we stopped paying on the loan to force the bank into a loan restructuring," Naik said.
The refinancing that includes a lower loan rate will save the hotel upward of $200,000 a year, Naik said. The bank also agreed to fund the hotel's unpaid property taxes, he said.
The Clarion Inn came under financial pressure when the U.S. recession hit at the same time several new hotels were opening in Pueblo, a double whammy that slowed revenues, Naik said.
Other hotels in Pueblo also came under stress. Two of them, the Marriott and the Ramada Inn, also are in the midst of foreclosure actions while remaining in full operation.
Looking to the future, the Clarion Inn operators are optimistic about the Pueblo market, Naik said. "We believe in the hotel. We believe in this town and we believe the economy is improving," Naik said.
Hotels aren't alone in feeling the squeeze of the recession and plunging property values.
The Clarion Inn's lender, Beach Business Bank, based in Manhattan Beach, Calif., recently agreed to sell to California-based First PacTrust Bancorp.
Beach's stock had dropped more than 50 percent since the recession began, according to the Los Angeles Times.
As part of the sale, First PacTrust will pay the remaining $4.5 million that Beach owes to the federal government under the Troubled Asset Relief Program. Beach will retain its name.
Beach Business Bank in August said the Clarion Inn's owner was in default on a Small Business Administration-backed loan with about $3.6 million of the $4.5 million note unpaid.
(c)2011 The Pueblo Chieftain (Pueblo, Colo.)
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