|By Carli Brosseau, The Arizona Daily
Star, TucsonMcClatchy-Tribune Regional News
Sept. 29, 2012--Yet another Tucson area resort has defaulted on its loan payments. The region's oldest luxury golf resort and its largest golf course is next in line at the auction block.
Hotel operators and investors interested in bidding on the Hilton Tucson El Conquistador Golf & Tennis Resort are scheduled to meet at 11:30 a.m. Dec. 6 on the east steps of the Pima County Superior Court Building, 110 W. Congress St.
In the meantime, the resort will continue to run as usual.
"Hilton Worldwide's management contract remains in full force and the resort will continue to receive the company's full resources and support providing uninterrupted service to its guests," said David Trumble, Hilton's senior director of corporate communications, the Americas, in an email.
"The owners of Hilton Tucson El Conquistador Golf & Tennis Resort and its lender have jointly agreed that ownership of the property will transfer to the lender," he wrote. He did not elaborate, and it wasn't clear whether the transfer would forestall the auction.
Metropolitan Life Insurance Co. was the lender for the most recent note on the property at 10000 N. Oracle Road in Oro Valley, which includes a 45-hole golf course, the area's largest by a full 18 holes.
The original sum of that note was $19.74 million, documents filed with the Pima County Recorder's Office show.
The owners under that agreement were CHH Tucson Partnership LP and EC Tenant Corp., both subsidiaries of Ashford Hospitality Trust, a Dallas-based real estate investment trust.
Ashford bought the property in 2007 as part of a $2.4 billion, 51-property portfolio and refinanced the property two years later.
Since the recession began in 2008, several of Tucson's resort jewels have struggled, going through foreclosure or bankruptcy proceedings.
The Westin La Paloma recently emerged from bankruptcy with new owners. The J.W. Marriott Starr Pass Tucson Resort & Spa has been in receivership, and the Westward Look Wyndam Grand Resort & Spa sold for the second time in six years in February. Others, such as the Ritz-Carlton, Dove Mountain, have struggled.
"We'll likely see more ownership changes in the next year," said Jerry Hawkins, a commercial real estate broker with CBRE Inc.
Hawkins and other observers of the Tucson resort market also anticipate a new round of renovations, especially since Phoenix Suns majority owner Robert Sarver and his Southwest Value Partners investment group took ownership of La Paloma and began a $30 million makeover project.
"As one property upgrades, pretty much everyone starts to upgrade a little bit," Hawkins said.
Hotels have seen a general uptick in occupancy since the recession hit bottom in 2009, but they have yet to see room rates rebound, he said.
Experts predict it will still be years before the market is back at pre-recession levels.
A hotel's value is directly related to the income it can generate, but the situation among Tucson resorts is not so bad that interested buyers are hard to find.
"There's plenty of money chasing hotels right now," Hawkins said.
The reason is in the pricing. Some hotels are selling for 30 percent what they would have a few years ago, he said.
Andria Burke, an appraiser with Burke Weissenborn LLC, declined to speculate on the value of the El Conquistador but noted that the resort -- which includes a more than 400-room hotel, an expansive golf course, a newly renovated 11,000-square-foot business center and 36 recently resurfaced tennis courts -- is a particularly complex property.
"The more specialized the property, the smaller the pool of bidders," she said. "There are investment groups who will want it. It's a nice property."
The fact that Hilton acknowledged its commitment to the resort will likely be seen as a plus, she said.
On the other side of the equation is the golf course, Hawkins said.
"Golf has a significant negative impact on a lot of these resorts," he said.
"You have to mow. You have to fertilize. You have to maintain. And it doesn't depend on how many people play."
Did you know?
When completed in 1982, the Sheraton Tucson El Conquistador Golf & Tennis Resort at 10000 N. Oracle Road was the largest hotel and conference center in the Tucson area. The $30 million complex would be surrounded by a $40 million townhouse development called El Conquistador Resort Patio Homes.
Source: Star archives
First photos from the $30 million renovation at Westin La Paloma.
Contact reporter Carli Brosseau at email@example.com or 573-4197. On Twitter @carlibrosseau.
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