Aug. 11–Carlsbad's luxury resort, Park Hyatt Aviara, has been taken over by its lender following a years-long struggle by its previous owners to repay debt that was coming due.
Although the transfer of ownership was recorded in early June, there was no formal announcement nor publicity surrounding the transaction.
A grant deed "in lieu of foreclosure" recorded in early June documents the transfer of the resort property to CW Capital Asset Management for the amount of unpaid debt totaling $186.5 million.
The 329-room hotel, formerly a Four Seasons-managed property, last changed hands in 2007 when Broadreach Capital Partners acquired a controlling interest in the hotel, then valued at $251 million.
Representatives of Broadreach did not return requests for comment. The investment firm co-owned the Aviara with Maritz, Wolff & Co., which has invested in a number of luxury properties managed by Four Seasons, Fairmont and Ritz-Carlton.
A representative of CW Capital also did not return phone calls seeking comment.
Park Hyatt management confirmed that there was new ownership but would not comment further.
"At this time, we can confirm transfer of Park Hyatt Aviara ownership to a lender-controlled entity," said Troy Wood, director of sales and marketing. "Hyatt continues to manage with no business disruption, and we are not at liberty to discuss details of ownership."
The change came after years of missed payments and a five-year loan extension and lowered interest rate that was granted in 2011. Just a year earlier, the owners had been close to defaulting on the loan, which at that time was put into special servicing.
The 2011 loan extension expired in February of this year.
"This is not a reflection that the hotel market was bad, it was a reflection that the owner paid too much and the debt was too high," said Alan Reay, president of Orange County-based Atlas Hospitality Group.
"The lender at one time had realized it was in their interest to cut the interest rate and work it out with the borrowers, but when the loan came due, the special servicer decided to not extend it any further and take the property back. And you have the borrower saying I'm not going to fight it."
The 200-acre resort was at the center of a very public feud in 2009 when Broadreach sought to oust the hotel's longtime operator, Four Seasons Hotels and Resorts.
Although Broadreach had tried to immediately remove Four Seasons, contending that it had failed to run the property in a "cost-effective manner," the matter ultimately went to arbitration.
A three-member panel eventually decided the two parties should terminate their relationship, but also concluded that both sides had "contributed to the demise of the business relationship."
A year later, Aviara became a Park Hyatt, which is the Hyatt chain's upscale, contemporary brand.
There was no indication of whether the Park Hyatt will be resold. CW Capital may decide it makes sense financially to hold onto the resort, Reay said.
"It used to be where special servicers would put the hotels up for sale right away, but now we're seeing the lenders hold on to the assets for a much longer period of time," he said. "They see that over the long term, they'll recoup their money or make a profit."
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