|By Dale Quinn, The Arizona Daily Star,
TucsonMcClatchy-Tribune Regional News
Dec. 21, 2011--Tucson hotel/apartments owner Humberto S. Lopez has purchased the Embassy Suites Tucson Williams Center out of bankruptcy.
A Lopez company, the Lopez Family Transamerica Holdings LLC, was a creditor owed about $2 million in the bankruptcy case of the hotel's former owner, Saunders of Yuma LLC.
The purchase of the property at 5335 E. Broadway, which has been approved in bankruptcy court, reorganizes Saunders of Yuma's debt and closes out the case.
Lopez, who owns Hotel Arizona downtown and apartment complexes across the state, said he purchased the property because he's looking to expand his hotel portfolio.
While the hotel industry has struggled recently with low property values and fewer people traveling, Lopez said it will recover eventually and the properties will become profitable.
"Being able to acquire them below replacement cost, I think we should do all right," Lopez said.
Under Lopez's plan, U.S. Bank -- the trustee for an investment group that was owed $17 million -- will have a secured claim of $7.5 million. Lopez paid $600,000 of that when the deal closed and the remaining $6.9 million was financed with a promissory note that matures Nov. 30, 2018.
Lopez also paid about $400,000 to establish a reserve for U.S. Bank, settle other creditors' claims and pay legal fees.
As part of the plan, Lopez must enter into a new franchise or brand agreement with an upper or upscale brand by Jan. 1, 2014.
Saunders of Yuma is managed by Michael Hanson and Randal Dix. Initially, Hanson and Dix tried to work directly with U.S. Bank to refinance the $17 million debt and retain ownership of the hotel. But that plan would have left out Lopez.
Not satisfied with that, Lopez then began negotiating with the senior lender to hammer out a deal where his company would take ownership of the property.
"It's always difficult to put together a deal in bankruptcy," Lopez said.
Eventually, the creditors and debtor reached a settlement. "At the end it was pretty amicable," Lopez said.
Hanson and Dix own several bankrupt hotels and commercial properties around Tucson, including the Westin La Paloma and the Doubletree Hotel Tucson at Reid Park.
Saunders of Yuma filed for Chapter 11 bankruptcy protection in February, saying it had between $1 million and $10 million in assets and between $10 million and $50 million in liabilities.
Did you know?
Humberto S. Lopez has asked the City Council to let him keep the sales tax generated over 20 years at his Hotel Arizona downtown so he can pay for renovations at the hotel, which has fallen badly into disrepair.
Lopez's request prompted other hotel operators in the Tucson Convention Center area to ask for the same deal, to no avail.
The city is, however, actively negotiating with Lopez over a tax rebate for his hotel.
Contact reporter Dale Quinn at firstname.lastname@example.org or 573-4197.
(c)2011 The Arizona Daily Star (Tucson, Ariz.)
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